FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS

N-CSRS 1 d589799dncsrs.htm FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS - CLASS 1 FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS - CLASS 1

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT

COMPANIES

Investment Company Act file number 811-05583

Franklin Templeton Variable Insurance Products Trust

(Exact name of registrant as specified in charter)

One Franklin Parkway, San Mateo, CA 94403-1906

(Address of principal executive offices) (Zip code)

Craig S. Tyle, One Franklin Parkway, San Mateo, CA 94403-1906

(Name and address of agent for service)

Registrant’s telephone number, including area code: (650) 312-2000

Date of fiscal year end: 12/31

Date of reporting period: 06/30/18

Item 1.

Reports to Stockholders.

Semiannual Report

June 30, 2018

Franklin Templeton

Variable Insurance Products Trust

LOGO

Franklin Templeton Variable Insurance

Products Trust Semiannual Report


Table of Contents

Important Notes to Performance Information			i
*Supplement to the Prospectus for all Funds			PS-1

Fund Summaries
Franklin Founding Funds Allocation VIP Fund			FFA-1
Franklin Global Real Estate VIP Fund			FGR-1
Franklin Growth and Income VIP Fund			FGI-1
Franklin Income VIP Fund			FI-1
Franklin Large Cap Growth VIP Fund			FLG-1
Franklin Mutual Global Discovery VIP Fund			MGD-1
Franklin Mutual Shares VIP Fund			MS-1
Franklin Rising Dividends VIP Fund			FRD-1
Franklin Small Cap Value VIP Fund			FSV-1
Franklin Small-Mid Cap Growth VIP Fund			FSC-1
Franklin Strategic Income VIP Fund			FSI-1
Franklin U.S. Government Securities VIP Fund			FUS-1
Templeton Developing Markets VIP Fund			TD-1
Templeton Foreign VIP Fund			TF-1
Templeton Global Bond VIP Fund			TGB-1
Templeton Growth VIP Fund			TG-1
Index Descriptions			I-1
Shareholder Information			SI-1

*Not part of the semiannual report. Retain for your records.


Not FDIC Insured \| May Lose Value \| No Bank Guarantee

MASTER CLASS – 1

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Important Notes to

Performance Information

Performance data is historical and cannot predict or guarantee future results. Principal value and investment return will fluctuate with market conditions, and you may have a gain or loss when you withdraw your money. Inception dates of the funds may have preceded the effective dates of the subaccounts, contracts or their availability in all states.

When reviewing the index comparisons, please keep in mind that indexes have a number of inherent performance differentials over the funds. First, unlike the funds, which must hold a minimum amount of cash to maintain liquidity, indexes do not

have a cash component. Second, the funds are actively managed and, thus, are subject to management fees to cover salaries of securities analysts or portfolio managers in addition to other expenses. Indexes are unmanaged and do not include any commissions or other expenses typically associated with investing in securities. Third, indexes often contain a different mix of securities than the fund to which they are compared. Additionally, please remember that indexes are simply a measure of performance and cannot be invested in directly.


i		Semiannual Report

VIP P1 07/18

LOGO

SUPPLEMENT DATED JULY 10, 2018

TO THE PROSPECTUS DATED MAY 1, 2018

FRANKLIN FLEX CAP GROWTH VIP FUND

FRANKLIN FOUNDING FUNDS ALLOCATION VIP FUND

FRANKLIN GLOBAL REAL ESTATE VIP FUND

FRANKLIN GROWTH AND INCOME VIP FUND

FRANKLIN INCOME VIP FUND

FRANKLIN LARGE CAP GROWTH VIP FUND

FRANKLIN MUTUAL GLOBAL DISCOVERY VIP FUND

FRANKLIN MUTUAL SHARES VIP FUND

FRANKLIN RISING DIVIDENDS VIP FUND

FRANKLIN SMALL CAP VALUE VIP FUND

FRANKLIN SMALL-MID CAP GROWTH VIP FUND

FRANKLIN STRATEGIC INCOME VIP FUND

FRANKLIN U.S. GOVERNMENT SECURITIES VIP FUND

FRANKLIN VOLSMART ALLOCATION VIP FUND

TEMPLETON DEVELOPING MARKETS VIP FUND

TEMPLETON FOREIGN VIP FUND

TEMPLETON GLOBAL BOND VIP FUND

TEMPLETON GROWTH VIP FUND

(each a series of Franklin Templeton Variable Insurance Products Trust)

I. The following replaces the third paragraph in the prospectus under “Additional Information, All Funds – Fund Account Information – Fund Account Policies – Calculating Share Price:”

The Fund calculates the NAV per share each business day as of 1 p.m. Pacific time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. The Fund does not calculate the NAV on days the NYSE is closed for trading, which include New Year’s Day, Martin Luther King Jr. Day, President’s Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. If the NYSE has a scheduled early close, the Fund’s share price would be determined as of the time of the close of the NYSE. If, due to weather or other special or unexpected circumstances, the NYSE has an unscheduled early close on a day that it has opened for business, the Fund reserves the right to consider that day as a regular business day and accept purchase and redemption orders and calculate its share price as of the normally scheduled close of regular trading on the NYSE.

Please keep this supplement with your prospectus for future reference.


				PS-1

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Franklin Founding Funds Allocation VIP Fund

This semiannual report for Franklin Founding Funds Allocation VIP Fund covers the period ended June 30, 2018.

Class 1 Performance Summary as of June 30, 2018

The Fund’s Class 1 Shares had a –0.80% total return* for the six-month period ended June 30, 2018.

*The Fund has an expense reduction contractually guaranteed through 4/30/19. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.

Performance reflects the Fund’s Class 1 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.


		Semiannual Report			FFA-1

FRANKLIN FOUNDING FUNDS ALLOCATION VIP FUND

Fund Goal and Main Investments

The Fund seeks capital appreciation, with income as a secondary goal. Under normal market conditions, the Fund invests equal portions in Class 1 shares of Franklin Income VIP Fund, Franklin Mutual Shares VIP Fund and Templeton Growth VIP Fund.

Fund Risks

All investments involve risks, including possible loss of principal. Because the Fund invests in underlying funds, and the Fund’s performance is directly related to the performance of the underlying funds held by it, the ability of the Fund to achieve its investment goals is directly related to the ability of the underlying funds to meet their investment goals. Additionally, because these underlying funds may engage in a variety of investment strategies involving certain risks, the Fund may be subject to these same risks. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bonds are affected by changes in interest rates and the creditworthiness of their issuers. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds adjust to a rise in interest rates, the Fund’s share price may decline. Higher yielding, lower rated corporate bonds entail a greater degree of credit risk compared to investment-grade securities. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks that are heightened in developing countries. Value securities may not increase in price as anticipated or may decline further in value. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Standard & Poor’s^® 500 Index (S&P 500^®) generated a +2.65% total return and the MSCI World Index produced a +0.76% total return for the same period.¹

Economic and Market Overview

The global economy expanded during the six-month period under review amid generally upbeat economic data across

Asset Allocation*

Based on Total Net Assets as of 6/30/18

LOGO

*The asset allocation is based on the Statement of Investments (SOI), which classifies each underlying fund into a broad asset class.

regions. In this environment, global developed and emerging market stocks reached a new all-time high in January 2018, as measured by the MSCI All Country World Index (ACWI). During the period, global markets were aided by price gains in oil and other commodities, encouraging corporate earnings reports and investor optimism about global economic growth. However, global stocks had a -0.13% total return for the six-month period, as measured by the MSCI ACWI, largely due to an overall decline in emerging market stocks.¹

Global markets reflected investor concerns about tensions in the Korean peninsula and political uncertainties in the US and the European Union, as well as worries that strong economic growth and rising inflation in some parts of the world, particularly in the US, would lead central banks to increase interest rates sooner than expected. Markets were further pressured by the Trump administration’s protectionist trade policies, uncertainty surrounding the US-China trade relationship, and a broad sell-off in information technology stocks in March due to a potential for tighter regulation in the sector arising from concerns about consumer data privacy. An overall easing of tensions in the Korean peninsula and intermittent US-China trade negotiations partially offset some of these concerns. However, US trade disputes with its allies and China near period-end dampened investor sentiment.

1. Source: Morningstar.

One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).


FFA-2		Semiannual Report

FRANKLIN FOUNDING FUNDS ALLOCATION VIP FUND

4.1% in December 2017, as reported at the beginning of the six-month period, to 4.0% at period-end.² Annual inflation, as measured by the Consumer Price Index, increased from 2.1% in December 2017, as reported at the beginning of the period, to 2.9% at period-end.² The US Federal Reserve raised its target range for the federal funds rate in March and June 2018 and continued reducing its balance sheet as part of its ongoing plan to normalize monetary policy.

In Europe, the UK’s quarterly economic growth moderated in 2018’s first quarter amid a decline in construction output. The Bank of England kept its key policy rate unchanged during the period. The eurozone’s quarterly growth moderated in 2018’s first quarter due to a decline in external demand. The bloc’s annual inflation rate ended the period higher than in December 2017. The European Central Bank (ECB) kept its benchmark interest rate unchanged during the period. However, at its June meeting, the ECB announced it would further reduce its monthly bond purchases beginning in October 2018 and indicated it would conclude the program at the end of 2018 while continuing to keep interest rates unchanged through at least the summer of 2019.

In Asia, Japan’s quarterly gross domestic product (GDP) growth in 2018’s first quarter declined, the country’s first contraction since 2015’s fourth quarter, mainly due to a decline in private residential investment and household consumption. The Bank of Japan left its benchmark interest rate unchanged during the period and continued its monetary stimulus measures.

In emerging markets, Brazil’s quarterly GDP accelerated in 2018’s first quarter compared to the previous quarter. The country’s central bank cut its benchmark interest rate twice during the period to spur economic growth. Russia’s annual GDP grew in 2018’s first quarter compared to the prior-year period, amid the Bank of Russia’s continued policy support. China’s annual GDP moderated in 2018’s first quarter compared to the prior-year period. The People’s Bank of China left its benchmark interest rate unchanged during the period. Overall, emerging market stocks, as measured by the MSCI Emerging Markets Index, declined during the period.³

Investment Strategy

The Fund normally invests its assets in an equally weighted combination of Class 1 shares of Franklin Income VIP Fund, Franklin Mutual Shares VIP Fund and Templeton Growth VIP

Fund. These underlying funds, in turn, invest in a variety of US and foreign equity securities and, to a lesser extent, fixed income and money market securities, each following a value-oriented approach. As market conditions affect the underlying funds, we rebalance the Fund’s allocations seeking to maintain equal weightings of approximately 33¹⁄₃% of total net assets in each underlying fund whenever the actual allocations exceed plus or minus 3% of the fixed allocation percentages.

Manager’s Discussion

The Fund’s performance can be attributed largely to its allocation among the underlying funds and their investments in domestic and foreign equities, fixed income securities, and short-term investments and other net assets.

During the six months under review, Franklin Income VIP Fund – Class 1 and Franklin Mutual Shares VIP Fund – Class 1 underperformed the S&P 500. Templeton Growth VIP Fund – Class 1 underperformed the MSCI World Index.

Thank you for your participation in Franklin Founding Funds Allocation VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2018, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

2. Source: US Bureau of Labor Statistics.

3. Please see Index Descriptions following the Fund Summaries.


		Semiannual Report		FFA-3

FRANKLIN FOUNDING FUNDS ALLOCATION VIP FUND

Class 1 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract Level: (1) transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes; and (2) ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses. The table below shows Fund-level ongoing expenses and can help you understand these costs and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The table below provides information about the actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of ongoing Fund expenses but does not include the effect of ongoing Contract expenses, is used to calculate the “Ending Account Value.” You can estimate the Fund-level expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number under the headings “Actual” and “Fund-Level Expenses Paid During Period” (if Fund-Level Expenses Paid During Period were $7.50, then 8.6 × $7.50= $64.50). In this illustration, the estimated expenses paid this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other mutual funds offered through the Contract. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds offered through the Contract.

Please note that expenses shown in the table are meant to highlight ongoing costs at the Fund level only and do not reflect any ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. In addition, while the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

Actual
(actual return after expenses)

Hypothetical
(5% annual return before expenses)

Share Class

Beginning
Account
Value 1/1/18

Ending Account
Value 6/30/18

Fund-Level
Expenses Paid
During Period
1/1/18–6/30/18

^1,2

Ending Account

Value 6/30/18

Fund-Level
Expenses Paid
During Period
1/1/18–6/30/18

^1,2

Net
Annualized
Expense
Ratio

Class 1

$1,000

$992.00

$0.49

$1,024.30

$0.50

0.10

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include any ongoing expenses of the Contract for which the Fund is an investment option or acquired fund fees and expenses.


FFA-4		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Founding Funds Allocation VIP Fund


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 1
Per share operating performance
(for a share outstanding throughout the period)

Net asset value, beginning of period		$7.44			$7.13			$6.80			$7.47			$7.47			$8.55


Income from investment operations^a:

Net investment income^b,c		0.17			0.21			0.21			0.26			0.22			0.30

Net realized and unrealized gains (losses)		(0.23	)		0.63			0.64			(0.68	)		0.02			1.42

Total from investment operations		(0.06	)		0.84			0.85			(0.42	)		0.24			1.72


Less distributions from:

Net investment income		(0.24	)		(0.22	)		(0.29	)		(0.24	)		(0.23	)		(1.15	)

Net realized gains		(0.17	)		(0.31	)		(0.23	)		(0.01	)		(0.01	)		(1.65	)

Total distributions		(0.41	)		(0.53	)		(0.52	)		(0.25	)		(0.24	)		(2.80	)

Net asset value, end of period		$6.97			$7.44			$7.13			$6.80			$7.47			$7.47


Total return^d		(0.80)%			12.17%			13.43%			(5.93)%			3.05%			24.14%

Ratios to average net assets^e

Expenses before waiver and payments by affiliates^f		0.12%			0.12%			0.11%			0.11%			0.11%			0.11%

Expenses net of waiver and payments by affiliates^f		0.10%			0.10%			0.10%			0.10%			0.10%			0.10%

Net investment income^c		4.49%			2.75%			3.09%			3.51%			2.88%			3.67%

Supplemental data

Net assets, end of period (000’s)		$1,070			$1,047			$1,025			$1,083			$1,114			$952

Portfolio turnover rate		0.06%			1.28%			0.10%			0.26%			4.80%			3.91%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds in which the Fund invests.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fDoes not include expenses of the Underlying Funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds was 0.66% for the period ended June 30, 2018.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FFA-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Founding Funds Allocation VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 2
Per share operating performance
(for a share outstanding throughout the period)

Net asset value, beginning of period		$7.39			$7.08			$6.75			$7.42			$7.42			$8.51


Income from investment operations^a:

Net investment income^b,c		0.16			0.18			0.19			0.24			0.20			0.27

Net realized and unrealized gains (losses)		(0.23	)		0.64			0.64			(0.68	)		0.02			1.42

Total from investment operations		(0.07	)		0.82			0.83			(0.44	)		0.22			1.69


Less distributions from:

Net investment income		(0.22	)		(0.20	)		(0.27	)		(0.22	)		(0.21	)		(1.13	)

Net realized gains		(0.17	)		(0.31	)		(0.23	)		(0.01	)		(0.01	)		(1.65	)

Total distributions		(0.39	)		(0.51	)		(0.50	)		(0.23	)		(0.22	)		(2.78	)

Net asset value, end of period		$6.93			$7.39			$7.08			$6.75			$7.42			$7.42


Total return^d		(0.93)%			11.98%			13.18%			(6.21)%			2.85%			23.77%

Ratios to average net assets^e

Expenses before waiver and payments by affiliates^f		0.37%			0.37%			0.36%			0.36%			0.36%			0.36%

Expenses net of waiver and payments by affiliates^f		0.35%			0.35%			0.35%			0.35%			0.35%			0.35%

Net investment income^c		4.24%			2.50%			2.84%			3.26%			2.63%			3.42%

Supplemental data

Net assets, end of period (000’s)		$448,172			$480,402			$474,669			$480,715			$557,704			$547,506

Portfolio turnover rate		0.06%			1.28%			0.10%			0.26%			4.80%			3.91%

^bBased on average daily shares outstanding.

^cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds in which the Fund invests.

^eRatios are annualized for periods less than one year.

^fDoes not include expenses of the Underlying Funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds was 0.66% for the period ended June 30, 2018.


FFA-6		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Founding Funds Allocation VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 4
Per share operating performance
(for a share outstanding throughout the period)

Net asset value, beginning of period		$7.53			$7.21			$6.87			$7.54			$7.54			$8.49


Income from investment operations^a:

Net investment income^b,c		0.15			0.18			0.19			0.23			0.20			0.26

Net realized and unrealized gains (losses)		(0.22	)		0.64			0.64			(0.68	)		0.02			1.43

Total from investment operations		(0.07	)		0.82			0.83			(0.45	)		0.22			1.69


Less distributions from:

Net investment income		(0.21	)		(0.19	)		(0.26	)		(0.21	)		(0.21	)		(0.99	)

Net realized gains		(0.17	)		(0.31	)		(0.23	)		(0.01	)		(0.01	)		(1.65	)

Total distributions		(0.38	)		(0.50	)		(0.49	)		(0.22	)		(0.22	)		(2.64	)

Net asset value, end of period		$7.08			$7.53			$7.21			$6.87			$7.54			$7.54


Total return^d		(0.90)%			11.78%			12.92%			(6.24)%			2.75%			23.68%

Ratios to average net assets^e

Expenses before waiver and payments by affiliates^f		0.47%			0.47%			0.46%			0.46%			0.46%			0.46%

Expenses net of waiver and payments by affiliates^f		0.45%			0.45%			0.45%			0.45%			0.45%			0.45%

Net investment income^c		4.14%			2.40%			2.74%			3.16%			2.53%			3.32%

Supplemental data

Net assets, end of period (000’s)		$475,787			$528,862			$530,403			$550,825			$702,324			$676,781

Portfolio turnover rate		0.06%			1.28%			0.10%			0.26%			4.80%			3.91%

^bBased on average daily shares outstanding.

^cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds in which the Fund invests.

^eRatios are annualized for periods less than one year.

^fDoes not include expenses of the Underlying Funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds was 0.66% for the period ended June 30, 2018.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FFA-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2018 (unaudited)


Franklin Founding Funds Allocation VIP Fund
		Shares		Value
	Investments in Underlying Funds 99.3%
	Domestic Equity 33.3%
a	Franklin Mutual Shares VIP Fund, Class 1		14,964,311	$	307,965,526

	Domestic Hybrid 32.8%
a	Franklin Income VIP Fund, Class 1		18,901,940		303,376,138

	Foreign Equity 33.2%
a	Templeton Growth VIP Fund, Class 1		21,633,444		307,627,570


	Total Investments in Underlying Funds (Cost $677,075,110)				918,969,234
	Other Assets, less Liabilities 0.7%				6,060,468

	Net Assets 100.0%			$	925,029,702

^aSee Note 3(d) regarding investments in Underlying Funds.


	FFA-8			Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2018 (unaudited)


	Franklin Founding Funds Allocation VIP Fund
Assets:
Investments in securities:
Cost - Non-controlled affiliates (Note 3d)	$	677,075,110

Value - Non-controlled affiliates (Note 3d)	$	918,969,234
Cash		6,694,409
Receivables:
Capital shares sold		347,821
Other assets		664

Total assets		926,012,128

Liabilities:
Payables:
Capital shares redeemed		361,015
Administrative fees		64,166
Distribution fees		474,679
Reports to shareholders		56,454
Accrued expenses and other liabilities		26,112

Total liabilities		982,426

Net assets, at value	$	925,029,702

Net assets consist of:
Paid-in capital	$	664,825,699
Undistributed net investment income		20,175,599
Net unrealized appreciation (depreciation)		241,894,124
Accumulated net realized gain (loss)		(1,865,720	)

Net assets, at value	$	925,029,702


Class 1:
Net assets, at value.	$	1,070,060

Shares outstanding		153,428

Net asset value and maximum offering price per share	$	6.97


Class 2:
Net assets, at value	$	448,172,286

Shares outstanding		64,677,013

Net asset value and maximum offering price per share	$	6.93


Class 4:
Net assets, at value	$	475,787,356

Shares outstanding		67,200,580

Net asset value and maximum offering price per share	$	7.08


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FFA-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2018 (unaudited)


	Franklin Founding Funds Allocation VIP Fund
Investment income:
Dividends:
Non-controlled affiliates (Note 3d)	$	22,112,059

Expenses:
Administrative fees (Note 3a)		480,936
Distribution fees: (Note 3b)
Class 2		578,990
Class 4		875,256
Reports to shareholders		42,777
Professional fees		23,433
Trustees’ fees and expenses		2,531
Other		6,830

Total expenses		2,010,753
Expenses waived/paid by affiliates (Note 3e)		(74,254	)

Net expenses		1,936,499

Net investment income		20,175,560

Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Non-controlled affiliates (Note 3d)		14,381,086
Capital gain distributions from Underlying Funds:
Non-controlled affiliates (Note 3d)		25,478,331

Net realized gain (loss)		39,859,417

Net change in unrealized appreciation (depreciation) on:
Investments:
Non-controlled affiliates (Note 3d)		(68,409,754	)

Net realized and unrealized gain (loss)		(28,550,337	)

Net increase (decrease) in net assets resulting from operations	$	(8,374,777	)


FFA-10		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets


	Franklin Founding Funds Allocation VIP Fund
	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	20,175,560		$	25,006,932
Net realized gain (loss)		39,859,417			32,208,741
Net change in unrealized appreciation (depreciation)		(68,409,754	)		57,408,783

Net increase (decrease) in net assets resulting from operations		(8,374,777	)		114,624,456

Distributions to shareholders from:
Net investment income:
Class 1		(35,091	)		(32,261	)
Class 2		(13,707,945	)		(12,990,591	)
Class 4		(13,721,977	)		(13,655,260	)
Net realized gains:
Class 1		(25,257	)		(45,646	)
Class 2		(10,734,915	)		(20,025,278	)
Class 4		(11,229,999	)		(21,899,278	)

Total distributions to shareholders		(49,455,184	)		(68,648,314	)

Capital share transactions: (Note 2)
Class 1		91,308			(23,477	)
Class 2		(3,849,436	)		(15,665,134	)
Class 4		(23,693,023	)		(26,073,212	)

Total capital share transactions		(27,451,151	)		(41,761,823	)

Net increase (decrease) in net assets		(85,281,112	)		4,214,319
Net assets:
Beginning of period		1,010,310,814			1,006,096,495

End of period	$	925,029,702		$	1,010,310,814

Undistributed net investment income included in net assets:
End of period	$	20,175,599		$	27,465,052


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FFA-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Founding Funds Allocation VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eighteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Founding Funds Allocation VIP Fund (Fund) is included in this report. The Fund invests primarily in other funds of the Trust (Underlying Funds). Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers three classes of shares: Class 1, Class 2 and Class 4. Each class of shares may differ by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The accounting policies of the Underlying Funds are outlined in their respective shareholder reports. A copy of the Underlying Funds’ shareholder reports is available on the U.S. Securities and Exchange Commission (SEC) website at sec.gov or at the SEC’s Public Reference Room in Washington, D.C. The Underlying Funds’ shareholder reports are not covered by this report.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Investments in the Underlying Funds are valued at their closing NAV each trading day.

b. Income Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of June 30, 2018, the Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.

c. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income and realized gain distributions by Underlying Funds are recorded on the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to the combined net assets of the Trust or based on the ratio of number of shareholders of each Fund to the combined number of shareholders of the Trust. Fund specific expenses are charged directly to the Fund that incurred the expense.


FFA-12		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Founding Funds Allocation VIP Fund (continued)

The Fund indirectly bears its proportionate share of expenses from the Underlying Funds. Since the Underlying Funds have varied expense levels and the Fund may own different proportions of the Underlying Funds at different times, the amount of expenses incurred indirectly by the Fund will vary.

Realized and unrealized gains and losses and net investment income, excluding class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions by class are generally due to differences in class specific expenses.

d. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and

liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

e. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

2. Shares of Beneficial Interest

At June 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 1 Shares:
Shares sold		7,295		$	53,518			15,386		$	112,506
Shares issued in reinvestment of distributions		8,536			60,348			11,035			77,907
Shares redeemed		(3,056	)		(22,558	)		(29,626	)		(213,890	)

Net increase (decrease)		12,775		$	91,308			(3,205	)	$	(23,477	)

Class 2 Shares:
Shares sold		1,440,666		$	10,613,656			3,596,772		$	26,184,474
Shares issued in reinvestment of distributions		3,476,936			24,442,860			4,703,115			33,015,869
Shares redeemed		(5,284,836	)		(38,905,952	)		(10,329,852	)		(74,865,477	)

Net increase (decrease)		(367,234	)	$	(3,849,436	)		(2,029,965	)	$	(15,665,134	)

Class 4 Shares:
Shares sold		557,693		$	4,186,677			2,459,253		$	18,233,389
Shares issued in reinvestment of distributions		3,475,206			24,951,976			4,965,718			35,554,538
Shares redeemed		(7,045,961	)		(52,831,676	)		(10,802,755	)		(79,861,139	)

Net increase (decrease)		(3,013,062	)	$	(23,693,023	)		(3,377,784	)	$	(26,073,212	)


		Semiannual Report			FFA-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Founding Funds Allocation VIP Fund (continued)

3. Transactions with Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers, directors and/or trustees of the Underlying Funds and of the following subsidiaries:


Subsidiary		Affiliation
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent

a. Administrative Fees

The Fund pays an administrative fee to FT Services of 0.10% per year of the average daily net assets of the Fund for administrative services including monitoring and rebalancing the percentage of the Fund’s investments in the Underlying Funds.

b. Distribution Fees

The Board has adopted distribution plans for Class 2 and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.35% per year of its average daily net assets of each class. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

c. Transfer Agent Fees

Investor Services, under terms of an agreement, performs shareholder servicing for the Fund and is not paid by the Fund for the services.

d. Investments in Underlying Funds

The Fund invests in Underlying Funds which are managed by affiliates of the Fund’s administrative manager, FT Services. The Fund does not invest in Underlying Funds for the purpose of exercising a controlling influence over the management or policies.

Investments in Underlying Funds for the period ended June 30, 2018, were as follows:


Underlying Funds	Number of Shares Held at Beginning of Period		Gross Additions		Gross Reductions			Number of Shares Held at End of Period		Value at End of Period		Dividend Income		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)
Non-Controlled Affiliates
Franklin Income VIP Fund, Class 1		20,134,973		979,260		(2,212,293	)		18,901,940	$	303,376,138	$	15,250,045	$	2,899,147		$(15,678,425	)
Franklin Mutual Shares VIP Fund, Class 1		16,254,912		—		(1,290,601	)		14,964,311		307,965,526		—		3,199,658		(5,004,257	)
Templeton Growth VIP Fund, Class 1		20,714,775		2,227,296		(1,308,627	)		21,633,444		307,627,570		6,862,014		33,760,612^a		(47,727,072	)

Total Affiliated Securities										$	918,969,234	$	22,112,059	$	39,859,417		$(68,409,754	)

^aIncludes realized gain distributions received.


FFA-14		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Founding Funds Allocation VIP Fund (continued)

e. Waiver and Expense Reimbursements

FT Services has contractually agreed in advance to waive or limit its fees and to assume as its own expense certain expenses otherwise payable by the Fund so that the expenses (excluding distribution fees, and acquired fund fees and expenses) for each class of the Fund do not exceed 0.10%, based on the average net assets of each class (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until April 30, 2019. Total expenses waived or paid are not subject to recapture subsequent to the Fund’s fiscal year end.

4. Income Taxes

At June 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


Cost of investments	$718,790,945

Unrealized appreciation	$241,894,124
Unrealized depreciation	(41,715,835	)

Net unrealized appreciation (depreciation)	$200,178,289

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of wash sales.

5. Investment Transactions

Purchases and sales of Underlying Funds (excluding short term securities) for the period ended June 30, 2018, aggregated $600,000 and $84,896,411, respectively.

6. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $2 billion (Global Credit Facility) which matures on February 8, 2019. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statement of Operations. During the period ended June 30, 2018, the Fund did not use the Global Credit Facility.

7. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

•

Level 1 – quoted prices in active markets for identical financial instruments

•

Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)


		Semiannual Report			FFA-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Founding Funds Allocation VIP Fund (continued)

7. Fair Value Measurements (continued)

•

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

At June 30, 2018, all of the Fund’s investments in financial instruments carried at fair value were valued using Level 1 inputs. For detailed categories, see the accompanying Statement of Investments.

8. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.


FFA-16		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Tax Information (unaudited)

Franklin Founding Funds Allocation VIP Fund

During the fiscal year ended December 31, 2017, the Fund, a qualified fund of funds under Section 852(g)(2) of Internal Revenue Code (Code), received an allocation of foreign taxes paid from one or more of its underlying funds. As shown in the table below, the Fund hereby reports to shareholders the foreign source income and foreign taxes paid by underlying funds, pursuant to Section 853 of the Code. This written statement will allow shareholders of record on June 14, 2018, to treat their proportionate share of foreign taxes paid by the underlying funds as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.

The following table provides a detailed analysis of foreign tax paid, and foreign source income as reported by the Fund, to Class 1, Class 2, and Class 4 shareholders of record.


Class	Foreign Tax Paid Per Share	Foreign Source Income Per Share
Class1	$0.0039	$0.0409
Class2	$0.0039	$0.0409
Class4	$0.0039	$0.0409

Foreign Tax Paid Per Share (Column 1) is the amount per share available to you, as a tax credit (assuming you held your shares in the Fund for a minimum of 16 days during the 31-day period beginning 15 days before the ex-dividend date of the Fund’s distribution to which the foreign taxes relate), or, as a tax deduction.

Foreign Source Income Per Share (Column 2) is the amount per share of income dividends attributable to foreign securities held by the Fund, plus any foreign taxes withheld on these dividends.


		Semiannual Report			FFA-17

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Franklin Global Real Estate VIP Fund

This semiannual report for Franklin Global Real Estate VIP Fund covers the period ended June 30, 2018.

Class 1 Performance Summary as of June 30, 2018

The Fund’s Class 1 Shares had a -0.09% total return for the six-month period ended June 30, 2018.


		Semiannual Report			FGR-1

FRANKLIN GLOBAL REAL ESTATE VIP FUND

Fund Goal and Main Investments

The Fund seeks high total return. Under normal market conditions, the Fund invests at least 80% of its net assets in investments of companies located anywhere in the world that operate in the real estate sector, including: real estate investment trusts (REITs) and similar REIT-like entities domiciled outside the US; companies qualifying under US federal tax law as REITs; and companies that derive at least half of their assets or revenues from the ownership, management, development or sale of residential or commercial real estate (such as real estate operating or service companies).

What is a REIT?

A REIT is a type of real estate company that is dedicated to owning and usually operating income-producing real estate properties such as apartments, hotels, industrial properties, office buildings or shopping centers. Equity REITs generally receive income from rents received, are generally operated by experienced property management teams and typically concentrate on a specific geographic region or property type.

Fund Risks

All investments involve risks, including possible loss of principal. The Fund concentrates in real estate securities, which involve special risks, such as declines in the value of real estate and increased susceptibility to adverse economic or regulatory developments affecting the sector. The Fund’s investments in REITs involve additional risks; since REITs typically are invested in a limited number of projects or in a particular market segment, they are more susceptible to adverse developments affecting a single project or market segment than more broadly diversified investments. Foreign investing, especially in emerging markets, involves additional risks such as currency and market volatility, as well as political and social instability. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the FTSE EPRA/NAREIT Developed Index posted a +0.91% total return for the same period.¹

Portfolio Composition

Based on Total Net Assets as of 6/30/18

LOGO

Economic and Market Overview

The global economy expanded during the six-month period under review amid generally upbeat economic data across regions. In this environment, global developed and emerging market stocks reached a new all-time high in January 2018, as measured by the MSCI All Country World Index (ACWI). During the period, global markets were aided by price gains in oil and other commodities, encouraging corporate earnings reports and investor optimism about global economic growth. However, global stocks had a -0.13% total return for the six-month period, as measured by the MSCI ACWI, largely due to an overall decline in emerging market stocks.¹

1. Source: Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).


FGR-2		Semiannual Report

FRANKLIN GLOBAL REAL ESTATE VIP FUND

The US economy continued to grow during the six months under review. After moderating for three consecutive quarters, the economy grew faster in 2018’s second quarter, driven by consumer spending, exports, business investment and government spending. The unemployment rate declined from 4.1% in December 2017, as reported at the beginning of the six-month period, to 4.0% at period-end.² Annual inflation, as measured by the Consumer Price Index, increased from 2.1% in December 2017, as reported at the beginning of the period, to 2.9% at period-end.² The US Federal Reserve raised its target range for the federal funds rate in March and June 2018 and continued reducing its balance sheet as part of its ongoing plan to normalize monetary policy.

In Asia, Japan’s quarterly gross domestic product (GDP) growth in 2018’s first quarter declined, the country’s first contraction since 2015’s fourth quarter, mainly due to a decline


Top 10 Countries
6/30/18
	% of Total Net Assets
U.S.		51.8%
Japan		10.7%
Hong Kong		7.7%
Germany		5.8%
U.K.		5.4%
Australia		5.0%
Singapore		3.3%
Sweden		2.2%
Canada		2.1%
Netherlands		2.0%

in private residential investment and household consumption. The Bank of Japan left its benchmark interest rate unchanged during the period and continued its monetary stimulus measures.

According to the FTSE EPRA/NAREIT Developed Index, in US dollar terms, most countries outpaced the index. Among the leaders were Hong Kong, the US, Germany and the UK. Singapore, Australia and France also performed well. In contrast, Japan lost value and New Zealand underperformed the index. At period-end, the US was the index’s largest country weighting.

Investment Strategy

We seek to limit price volatility by investing across markets and property types. When selecting investments for the Fund’s portfolio, we apply a “bottom-up” stock selection process that incorporates macro-level views in the evaluation process. Our portfolio construction process combines bottom-up analysis of individual stock and real estate market fundamentals and

2. Source: US Bureau of Labor Statistics.

3. Please see Index Descriptions following the Fund Summaries.


		Semiannual Report		FGR-3

FRANKLIN GLOBAL REAL ESTATE VIP FUND

top-down macro overlays to provide country/regional, property type, and company size perspectives in identifying international/local cyclical and thematic trends that highlight investment opportunities.

Manager’s Discussion

During the six months under review, key detractors from the Fund’s performance relative to the FTSE EPRA/NAREIT Developed Index included an underweighting and security selection in the health care property sector.⁴ Shares of CareTrust REIT underperformed along with other health care REITs, largely due to prevailing negative investor sentiment about the industry in a rising interest-rate environment. CareTrust is a small-capitalization REIT, which originally spun off from Ensign Group, a major publicly traded health care operator, in 2014. CareTrust focuses on ownership of skilled nursing and senior housing health care real estate, and its stock was pressured following the company’s announcement of tenant-related issues. Our initial investment thesis was based on our view that CareTrust would successfully grow with acquisitions in the skilled nursing and senior housing segments. Our thesis played out nicely last year as the company executed on its external growth strategy, reflected in the stock’s strong performance as it generated higher returns than its peers for our portfolios. After learning about CareTrust’s tenant issues, we grew increasingly concerned about the company’s ability to continue to make acquisitions and finance its external growth after the stock’s sell-off. As a result, we recently liquidated our position in the company.

The Fund’s underweighted position and stock selection in the diversified sector also weighed on results.⁵ Shares of City Developments was a major detractor during the period. As the biggest private developer in Singapore, the company benefited from strong private home price increases earlier in the year, while its share price started to decline over the past three months. As private home prices increased in the first quarter of 2018 and momentum of land and home prices remained on an uptrend in the second quarter, City Developments started to weaken due to concerns over the sustainability of the residential cycle, the possibility of policy interventions, and a rising interest rate environment. We believe Singapore has strong residential fundamentals underpinned by economic growth, tight near-term supply, and favorable affordability, and City Developments is well positioned with a strong launch


Top 10 Holdings
6/30/18
Company Sector/Industry, Country	% of Total Net Assets
Simon Property Group Inc. Retail REITs, U.S.		4.2%
Prologis Inc. Industrial REITs, U.S.		3.4%
Mitsui Fudosan Co. Ltd. Diversified Real Estate Activities, Japan		2.7%
Deutsche Wohnen SE Real Estate Operating Companies, Germany		2.5%
Equity Residential Residential REITs, U.S.		2.5%
AvalonBay Communities Inc. Residential REITs, U.S.		2.2%
CK Asset Holdings Ltd. Real Estate Development, Hong Kong		2.2%
Digital Realty Trust Inc. Specialized REITs, U.S.		2.2%
Unibail-Rodamco-Westfield Retail REITs, Netherlands		2.0%
Mitsubishi Estate Co. Ltd. Diversified Real Estate Activities, Japan		2.0%

pipeline. However, policy tightening remains the biggest risk to City Developments’ share performance.

Relative returns were further pressured by stock selection in the hotel and resort industry and by an unfavorable underweighting in storage property.⁶ Shares of Public Storage, a leading public storage REIT, performed particularly well during the period, and as a result our existing underweighted position in the stock detracted from results. Despite the strong performance of storage REITs in the first half of this year, we remain cautious on fundamentals over the next 12 to 18 months as supply pressures have yet to be reflected in operating trends. Following several years of very strong fundamentals, storage revenue growth, albeit stable, started to slow in recent quarters. Nevertheless, recent results came in better than reduced expectations. We think storage stock valuations remain relatively less attractive given their current premium levels. We remain selective in the industry and believe our two overweightings in CubeSmart and Extra Space Storage should perform well.

4. The health care property holdings are in health care REITs in the SOI.

5. Diversified holdings are in diversified real estate activities, diversified REITs, real estate development and real estate operating companies in the SOI.

6. Hotel and resort holdings are in hotel and resort REITs and hotels, resorts and cruise lines in the SOI. Storage property holdings are in specialized REITs in the SOI.


FGR-4		Semiannual Report

FRANKLIN GLOBAL REAL ESTATE VIP FUND

Conversely, stock selection in the residential sector supported relative returns over the period.⁷ Shares of Deutsche Wohnen, which owns residential properties in Germany, mostly in Berlin, outperformed the benchmark. In our view, the Berlin residential market seems attractive with its supply and demand mismatch, which continues to put upward pressure on rents as vacancy in the market has decreased sharply. Management has continued to see further significant reversionary potential in the existing portfolio. We believe new supply for lower- to middle-income housing is limited as portfolio valuations remain much below replacement costs. Berlin still offers low average rent levels compared to other larger western German cities and major cities in Europe. Germany overall features a supportive economic environment with unemployment at close to 20-year lows and steady gross domestic product growth in recent years. In our analysis, Deutsche Wohnen continues to be attractive based on our internal momentum model and on valuation metrics.

The Fund’s underweighted position in the retail property sector and overweighted position in the industrial property sector also boosted results.⁸ Shares of Segro, which owns and operates industrial properties in the UK and Continental Europe, outperformed the benchmark. The UK market is benefiting from strong growth in ecommerce, and the lack of good quality available product is driving rental growth, with limited new supply and scarcity of industrial zoned land. The rental growth prospects in Continental Europe are improving and key urban hubs are expected to see accelerating rental growth. In our analysis, Segro continues to be at the top of our UK list based on our internal momentum model and seems attractive to us versus its industrial peers on valuation. The company’s balance sheet remains conservative and it has a strong development pipeline, with what we view as an attractive yield.

Other individual contributors to relative performance included diversified Japanese REIT Mitsui Fudosan. The firm is the largest property developer in Japan with a well-diversified business model in property leasing, sales and asset management. Over the past few years, Mitsui Fudosan has demonstrated steady profit and net-asset-value growth and achieved record high profits. In May 2018, the company announced its long-term business plan as well as its first share buyback. The company’s announcement that it would increase its target shareholder return, which suggests continuous share buybacks going forward, was well-received by market participants. Given Mitsui Fudosan is the biggest office

supplier of new grade-A office buildings from 2018–2020, we believe earnings should strengthen beyond 2020 against the backdrop of tight vacancy in Central Tokyo.

It is important to recognize the effect of currency movements on the Fund’s performance. In general, if the value of the US dollar goes up compared with a foreign currency, an investment traded in that foreign currency will go down in value because it will be worth fewer US dollars. This can have a negative effect on Fund performance. Conversely, when the US dollar weakens in relation to a foreign currency, an investment traded in that foreign currency will increase in value, which can contribute to Fund performance. For the six months ended June 30, 2018, the US dollar rose in value relative to most currencies. As a result, the Fund’s performance was negatively affected by the portfolio’s significant investment in securities with non-US currency exposure.

Thank you for your participation in Franklin Global Real Estate VIP Fund. We look forward to serving your future investment needs.

7. Residential holdings are in real estate operating companies and residential REITs in the SOI.

8. Retail property holdings are in retail REITs in the SOI. Industrial property holdings are in industrial REITs in the SOI.


		Semiannual Report			FGR-5

FRANKLIN GLOBAL REAL ESTATE VIP FUND

Class 1 Fund Expenses

Actual Fund Expenses

The table below provides information about the actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of ongoing Fund expenses but does not include the effect of ongoing Contract expenses, is used to calculate the “Ending Account Value.” You can estimate the Fund-level expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number under the headings “Actual” and “Fund-Level Expenses Paid During Period” (if Fund-Level Expenses Paid During Period were $7.50, then 8.6 × $7.50 = $64.50). In this illustration, the estimated expenses paid this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Actual
(actual return after expenses)

Hypothetical
(5% annual return before expenses)

Share Class

Beginning Account
Value 1/1/18

Ending Account
Value 6/30/18

Fund-Level

Expenses Paid

During Period

1/1/18–6/30/18

^1,2

Ending Account
Value 6/30/18

Fund-Level

Expenses Paid

During Period

1/1/18–6/30/18

^1,2

Annualized
Expense

Ratio

Class 1

$1,000

$999.10

$5.65

$1,019.14

$5.71

1.14%

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above — in the far right column — multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.

2. Does not include any ongoing expenses of the Contract for which the Fund is an investment option or acquired fund fees and expenses.


	FGR-6			Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Global Real Estate VIP Fund


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 1
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$16.96			$15.83			$15.93			$16.36			$14.29			$14.66


Income from investment operations^a:

Net investment income^b		0.18			0.17			0.30	^c		0.24			0.26			0.24

Net realized and unrealized gains (losses)		(0.20	)		1.52			(0.16	)		(0.12	)		1.92			0.13

Total from investment operations		(0.02	)		1.69			0.14			0.12			2.18			0.37


Less distributions from net investment income		(0.47	)		(0.56	)		(0.24	)		(0.55	)		(0.11	)		(0.74	)

Net asset value, end of period		$16.47			$16.96			$15.83			$15.93			$16.36			$14.29


Total return^d		(0.09)%			10.76%			0.81%			0.83%			15.27%			2.61%

Ratios to average net assets^e

Expenses		1.14%^f			1.14%^g			1.11%^g			1.11%			1.10%^f			1.10%

Net investment income		2.02%			1.04%			1.99%^c			1.49%			1.66%			1.62%

Supplemental data

Net assets, end of period (000’s)		$945			$819			$821			$32,161			$35,686			$34,276

Portfolio turnover rate		11.56%			22.18%			28.53%	^h		23.35%			16.67%			21.29%

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.06 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.59%.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^hExcludes the value of portfolio securities delivered as a result of a redemption in-kind.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FGR-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Global Real Estate VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 2
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$16.52			$15.42			$15.52			$15.95			$13.93			$14.27


Income from investment operations^a:

Net investment income^b		0.14			0.13			0.28^c			0.20			0.21			0.20

Net realized and unrealized gains (losses)		(0.17	)		1.47			(0.19	)		(0.12	)		1.88			0.13

Total from investment operations		(0.03	)		1.60			0.09			0.08			2.09			0.33


Less distributions from net investment income		(0.43	)		(0.50	)		(0.19	)		(0.51	)		(0.07	)		(0.67	)


Net asset value, end of period		$16.06			$16.52			$15.42			$15.52			$15.95			$13.93


Total return^d		(0.19	)%		10.47%			0.54%			0.57%			15.01%			2.32%

Ratios to average net assets^e

Expenses		1.39%^f			1.39%^g			1.36%^g			1.36%			1.35%^f			1.35%

Net investment income		1.77%			0.79%			1.74%^c			1.24%			1.41%			1.37%

Supplemental data

Net assets, end of period (000’s)		$168,511			$183,532			$193,707			$287,473			$333,554			$328,825

Portfolio turnover rate		11.56%			22.18%			28.53%^h			23.35%			16.67%			21.29%

^bBased on average daily shares outstanding.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^hExcludes the value of portfolio securities delivered as a result of a redemption in-kind.


FGR-8		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2018 (unaudited)


Franklin Global Real Estate VIP Fund
		Country		Shares		Value
	Common Stocks 99.3%
	Diversified Real Estate Activities 11.4%
	CapitaLand Ltd.		Singapore		698,695	$	1,620,519
	City Developments Ltd.		Singapore		209,947		1,684,261
	Mitsubishi Estate Co. Ltd.		Japan		194,656		3,406,194
	Mitsui Fudosan Co. Ltd.		Japan		186,978		4,516,728
	New World Development Co. Ltd.		Hong Kong		1,528,585		2,150,837
	Nomura Real Estate Holdings Inc.		Japan		58,200		1,292,340
	Sun Hung Kai Properties Ltd.		Hong Kong		199,171		3,005,569
	Tokyo Tatemono Co. Ltd.		Japan		117,732		1,617,692

							19,294,140

	Diversified REITs 8.8%
	Activia Properties Inc.		Japan		323		1,482,307
	Gecina SA		France		14,139		2,367,216
	GPT Group		Australia		386,146		1,446,178
	Hispania Activos Inmobiliarios SOCIMI SA		Spain		98,547		2,098,955
	Hulic REIT Inc.		Japan		738		1,144,052
	Kenedix Office Investment Corp.		Japan		258		1,603,541
	Land Securities Group PLC		United Kingdom		147,276		1,861,100
	PLA Administradora Industrial S de RL de CV		Mexico		519,307		708,798
	Stockland		Australia		428,648		1,259,537
	Washington REIT		United States		27,800		843,174

							14,814,858

	Health Care REITs 3.8%
	HCP Inc.		United States		42,489		1,097,066
	Ventas Inc.		United States		46,317		2,637,753
	Welltower Inc.		United States		42,276		2,650,283

							6,385,102

	Hotel & Resort REITs 4.7%
	Hoshino Resorts REIT Inc.		Japan		105		545,418
	Host Hotels & Resorts Inc.		United States		140,806		2,966,782
	LaSalle Hotel Properties		United States		14,100		482,643
	MGM Growth Properties LLC, A		United States		40,200		1,224,492
	Ryman Hospitality Properties Inc.		United States		16,700		1,388,605
	Sunstone Hotel Investors Inc.		United States		81,409		1,353,018

							7,960,958

	Hotels, Resorts & Cruise Lines 0.7%
	Hilton Worldwide Holdings Inc.		United States		15,214		1,204,340

	Industrial REITs 11.7%
	First Industrial Realty Trust Inc.		United States		71,453		2,382,243
	Frasers Logistics & Industrial Trust		Singapore		646,696		498,389
	GLP J-REIT		Japan		1,140		1,211,112
	Goodman Group		Australia		366,890		2,612,346
	Mapletree Logistics Trust		Singapore		1,064,771		961,260
	Nippon Prologis REIT Inc.		Japan		581		1,206,141
	Prologis Inc.		United States		88,369		5,804,960
	Rexford Industrial Realty Inc.		United States		58,874		1,848,055
	Segro PLC		United Kingdom		379,087		3,351,165

							19,875,671

	Internet Software & Services 0.0%^†
a	OneMarket Ltd.		Australia		6,682		6,330


		Semiannual Report		FGR-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)


		Country		Shares		Value
	Common Stocks (continued)
	Office REITs 10.5%
	Alexandria Real Estate Equities Inc.		United States		22,421	$	2,828,857
	Boston Properties Inc.		United States		22,685		2,845,153
	Brandywine Realty Trust		United States		80,695		1,362,132
	Cousins Properties Inc.		United States		133,400		1,292,646
	Derwent London PLC		United Kingdom		43,632		1,789,690
	Dexus		Australia		269,428		1,936,340
	Highwoods Properties Inc.		United States		24,710		1,253,538
	Kilroy Realty Corp.		United States		28,044		2,121,248
	SL Green Realty Corp.		United States		18,722		1,882,123
	Vornado Realty Trust		United States		6,927		512,044

							17,823,771

	Real Estate Development 2.7%
	CK Asset Holdings Ltd.		Hong Kong		467,127		3,709,129
a	Howard Hughes Corp.		United States		6,940		919,550

							4,628,679

	Real Estate Operating Companies 10.0%
	ADO Properties SA		Germany		12,284		668,230
b	ADO Properties SA, 144A		Germany		28,207		1,534,415
	Aroundtown SA		Germany		189,509		1,557,639
	Deutsche Wohnen SE		Germany		86,847		4,200,763
	Fabege AB		Sweden		132,326		1,579,853
	First Capital Realty Inc.		Canada		51,064		802,756
	Hemfosa Fastigheter AB		Sweden		108,525		1,270,475
	Hufvudstaden AB, A		Sweden		71,187		1,020,240
	Hysan Development Co. Ltd.		Hong Kong		234,065		1,306,651
	Swire Properties Ltd.		Hong Kong		313,400		1,158,366
	Vonovia SE		Germany		37,903		1,805,015

							16,904,403

	Residential REITs 10.7%
	AvalonBay Communities Inc.		United States		22,089		3,796,878
	Camden Property Trust		United States		28,300		2,578,979
	Canadian Apartment Properties REIT		Canada		59,175		1,919,518
	Equity Lifestyle Properties Inc.		United States		24,458		2,247,690
	Equity Residential		United States		65,233		4,154,690
	Essex Property Trust Inc.		United States		6,052		1,446,852
	Unite Group PLC		United Kingdom		173,675		1,974,748

							18,119,355

	Retail REITs 15.5%
	Agree Realty Corp.		United States		22,421		1,183,156
	CapitaLand Mall Trust		Singapore		601,200		913,416
	GGP Inc.		United States		46,174		943,335
	Link REIT		Hong Kong		163,837		1,496,157
	The Macerich Co.		United States		11,900		676,277
	Realty Income Corp.		United States		45,617		2,453,738
	Regency Centers Corp.		United States		35,139		2,181,429
	Retail Properties of America Inc., A		United States		111,300		1,422,414
	Scentre Group		Australia		438,780		1,425,710
	Simon Property Group Inc.		United States		41,826		7,118,367
	SmartCentres REIT		Canada		36,530		848,623
	Taubman Centers Inc.		United States		9,300		546,468


FGR-10		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)


		Country		Shares		Value
	Common Stocks (continued)
	Retail REITs (continued)
a	Unibail-Rodamco-Westfield		Netherlands		15,515	$	3,417,837
a	Unibail-Rodamco-Westfield, IDR		France		49,174		533,931
	Weingarten Realty Investors		United States		37,029		1,140,864

							26,301,722

	Specialized REITs 8.8%
	American Tower Corp.		United States		12,200		1,758,874
	Coresite Realty Corp.		United States		14,669		1,625,619
	CubeSmart		United States		47,393		1,527,002
	Digital Realty Trust Inc.		United States		33,068		3,689,727
	Extra Space Storage Inc.		United States		22,700		2,265,687
	Iron Mountain Inc.		United States		22,600		791,226
	Public Storage		United States		9,544		2,165,152
	Weyerhaeuser Co.		United States		28,800		1,050,048

							14,873,335


	Total Common Stocks (Cost $111,896,089)						168,192,664


				Principal Amount
	Short Term Investments (Cost $740,517) 0.4%
	Repurchase Agreements 0.4%
c	Joint Repurchase Agreement, 2.10%, 7/02/18 (Maturity Value $740,646)
	BNP Paribas Securities Corp. (Maturity Value $265,788) Deutsche Bank Securities Inc. (Maturity Value $9,725) HSBC Securities (USA) Inc. (Maturity Value $465,133)
	Collateralized by U.S. Government Agency Securities, 0.00% - 3.625%, 9/18/18 -6/19/23; ^dU.S. Treasury Bill, 10/04/18 - 10/18/18; and U.S. Treasury Note, 2.00% -3.50%, 5/15/20 - 8/31/21 (valued at $755,748)		United States	$	740,517		740,517


	Total Investments (Cost $112,636,606) 99.7%						168,933,181
	Other Assets, less Liabilities 0.3%						523,552

	Net Assets 100.0%					$	169,456,733

See Abbreviations on page FGR-21.

^†Rounds to less than 0.1% of net assets.

^aNon-income producing.

^bSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2018, the value of this security was $1,534,415, representing 0.9% of net assets.

^cSee Note 1(c) regarding joint repurchase agreement.

^dThe security was issued on a discount basis with no stated coupon rate.


The accompanying notes are an integral part of these financial statements. \| Semiannual Report				FGR-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2018 (unaudited)


	Franklin Global Real Estate VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	111,896,089
Cost - Unaffiliated repurchase agreements		740,517

Value - Unaffiliated issuers	$	168,192,664
Value - Unaffiliated repurchase agreements		740,517
Receivables:
Investment securities sold		592,008
Capital shares sold		2,402
Dividends		902,447
European Union tax reclaims		112,807
Other assets		117

Total assets		170,542,962

Liabilities:
Payables:
Investment securities purchased		579,118
Capital shares redeemed		214,488
Management fees		146,497
Distribution fees		70,638
Accrued expenses and other liabilities		75,488

Total liabilities		1,086,229

Net assets, at value	$	169,456,733

Net assets consist of:
Paid-in capital	$	117,258,687
Distributions in excess of net investment income		(3,152,694	)
Net unrealized appreciation (depreciation)		56,288,725
Accumulated net realized gain (loss)		(937,985	)

Net assets, at value	$	169,456,733


Class 1:
Net assets, at value	$	945,281

Shares outstanding		57,379

Net asset value and maximum offering price per share	$	16.47


Class 2:
Net assets, at value	$	168,511,452

Shares outstanding		10,491,155

Net asset value and maximum offering price per share	$	16.06


FGR-12		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2018 (unaudited)


	Franklin Global Real Estate VIP Fund
Investment income:
Dividends: (net of foreign taxes)*
Unaffiliated issuers	$	2,699,513
Interest:
Unaffiliated issuers		3,693

Total investment income		2,703,206

Expenses:
Management fees (Note 3a)		899,082
Distribution fees: (Note 3c)
Class 2		212,891
Custodian fees (Note 4)		6,682
Reports to shareholders		26,583
Professional fees		37,844
Trustees’ fees and expenses		469
Other		5,873

Total expenses		1,189,424
Expense reductions (Note 4)		(11	)

Net expenses		1,189,413

Net investment income		1,513,793

Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		4,763,654
Realized gain distributions from REITs		544,298
Foreign currency transactions		(2,716	)

Net realized gain (loss)		5,305,236

Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(7,438,717	)
Translation of other assets and liabilities denominated in foreign currencies		(11,805	)

Net change in unrealized appreciation (depreciation)		(7,450,522	)

Net realized and unrealized gain (loss)		(2,145,286	)

Net increase (decrease) in net assets resulting from operations	$	(631,493	)

*Foreign taxes withheld on dividends	$	164,521


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FGR-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets


	Franklin Global Real Estate VIP Fund
	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	1,513,793		$	1,509,596
Net realized gain (loss)		5,305,236			11,105,782
Net change in unrealized appreciation (depreciation)		(7,450,522	)		6,230,763

Net increase (decrease) in net assets resulting from operations		(631,493	)		18,846,141

Distributions to shareholders from:
Net investment income:
Class 1		(26,319	)		(26,726	)
Class 2		(4,381,023	)		(5,862,949	)

Total distributions to shareholders		(4,407,342	)		(5,889,675	)

Capital share transactions: (Note 2)
Class 1		152,841			(57,079	)
Class 2		(10,008,706	)		(23,075,937	)

Total capital share transactions		(9,855,865	)		(23,133,016	)

Net increase (decrease) in net assets		(14,894,700	)		(10,176,550	)
Net assets:
Beginning of period		184,351,433			194,527,983

End of period	$	169,456,733		$	184,351,433

Distributions in excess of net investment income included in net assets:
End of period	$	(3,152,694	)	$	(259,145	)


FGR-14		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Global Real Estate VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eighteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Global Real Estate VIP Fund (Fund) is included in this report. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. At June 30, 2018, 84.4% of the Fund’s shares were held through one insurance company. Investment activities of these insurance company separate accounts could have a material impact on the Fund. The Fund offers two classes of shares: Class 1 and Class 2. Each class of shares may differ by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

into its U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.

Investments in repurchase agreements are valued at cost, which approximates fair value.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.


		Semiannual Report		FGR-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

a. Financial Instrument Valuation (continued)

specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the Fund’s NAV is not calculated, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

The Fund does not separately report the effect of changes in foreign exchange rates from changes in market prices on securities held. Such changes are included in net realized and unrealized gain or loss from investments in the Statement of Operations.

Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period.

c. Joint Repurchase Agreement

The Fund enters into a joint repurchase agreement whereby its uninvested cash balance is deposited into a joint cash account with other funds managed by the investment manager or an affiliate of the investment manager and is used to invest in one or more repurchase agreements. The value and face amount of the joint repurchase agreement are allocated to the funds based on their pro-rata interest. A repurchase agreement is accounted for as a loan by the Fund to the seller, collateralized by securities which are delivered to the Fund’s custodian. The fair value, including accrued interest, of the initial collateralization is required to be at least 102% of the dollar amount invested by the funds, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Fund, certain MRAs may permit the non-defaulting party to net and close-out all transactions, if any, traded under such agreements. The Fund may sell securities it holds as collateral and apply the proceeds towards the repurchase price and any other amounts owed by the seller to the Fund in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls below the repurchase price owed by the seller. The joint repurchase agreement held by the Fund at period end, as indicated in the Statement of Investments, had been entered into on June 29, 2018.

d. Securities Lending

The Fund participates in an agency based securities lending program to earn additional income. The Fund receives cash collateral against the loaned securities in an amount equal to at


FGR-16		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of Fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Fund. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned, net of fees paid to the securities lending agent and/or third-party vendor, is reported separately in the Statement of Operations. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower. At June 30, 2018, the Fund had no securities on loan.

e. Income and Deferred Taxes

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply, the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

EU reclaims is reflected as other income in the Statement of Operations and any related receivable, if any, is reflected as European Union tax reclaims in the Statement of Assets and Liabilities. When uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these EU reclaims, and the potential timing of payment, no amounts are reflected in the financial statements. For U.S. income tax purposes, when EU reclaims are received by the Fund and the Fund previously passed foreign tax credit on to its shareholders, the Fund must either amend historic tax reporting to shareholders or enter into a closing agreement with the Internal Revenue Service (IRS) in order to pay the associated tax liability on behalf of the Fund’s shareholders.

f. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Dividend income and realized gain distributions are recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.


		Semiannual Report		FGR-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

f. Security Transactions, Investment Income, Expenses and Distributions (continued)

Distributions received by the Fund from certain securities may be a return of capital (ROC). Such distributions reduce the cost basis of the securities, and any distributions in excess of the cost basis are recognized as capital gains. For U.S. Real Estate Investment Trust (REIT) securities, the Fund records ROC estimates, if any, on the ex-dividend date and are adjusted once actual tax designations are known.

g. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

h. Guarantees and Indemnifications

2. Shares of Beneficial Interest

At June 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 1 Shares:
Shares sold		8,928		$	150,452			1,644		$	26,478
Shares issued in reinvestment of distributions		1,610			26,319			1,626			26,726
Shares redeemed		(1,473	)		(23,930	)		(6,836	)		(110,283	)

Net increase (decrease)		9,065		$	152,841			(3,566	)	$	(57,079	)

Class 2 Shares:
Shares sold		86,384		$	1,370,829			147,438		$	2,348,274
Shares issued in reinvestment of distributions		274,844			4,381,023			365,520			5,862,949
Shares redeemed		(981,742	)		(15,760,558	)		(1,961,819	)		(31,287,160	)

Net increase (decrease)		(620,514	)	$	(10,008,706	)		(1,448,861	)	$	(23,075,937	)


FGR-18		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

3. Transactions with Affiliates


Subsidiary		Affiliation
Franklin Templeton Institutional, LLC (FT Institutional)		Investment manager
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent

a. Management Fees

The Fund pays an investment management fee to FT Institutional based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
1.050%		Up to and including $500 million
0.950%		Over $500 million, up to and including $1 billion
0.900%		Over $1 billion, up to and including $1.5 billion
0.850%		Over $1.5 billion, up to and including $6.5 billion
0.830%		Over $6.5 billion, up to and including $11.5 billion
0.810%		Over $11.5 billion, up to and including $16.5 billion
0.790%		Over $16.5 billion, up to and including $19 billion
0.780%		Over $19 billion, up to and including $21.5 billion
0.770%		In excess of $21.5 billion

For the period ended June 30, 2018, the annualized gross effective investment management fee rate was 1.050% of the Fund’s average daily net assets.

b. Administrative Fees

Under an agreement with FT Institutional, FT Services provides administrative services to the Fund. The fee is paid by FT Institutional based on the Fund’s average daily net assets, and is not an additional expense of the Fund.

c. Distribution Fees

The Board has adopted a distribution plan for Class 2 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plan, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.35% per year of its average daily net assets. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

Investor Services, under terms of an agreement, performs shareholder servicing for the Fund and is not paid by the Fund for the services.


		Semiannual Report		FGR-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2018, the custodian fees were reduced as noted in the Statement of Operations.

5. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates.

At December 31, 2017, the Fund had capital loss carryforwards of $2,192,369 expiring in 2018.

At June 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


Cost of investments	$121,992,229

Unrealized appreciation	$58,276,252
Unrealized depreciation	(11,335,300	)

Net unrealized appreciation (depreciation)	$46,940,952

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of passive foreign investment company shares.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2018, aggregated $20,009,698 and $31,864,313, respectively.

7. Concentration of Risk

Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities.

The Fund invests a large percentage of its total assets in REIT securities. Such concentration may subject the Fund to special risks associated with real estate securities. These securities may be more sensitive to economic or regulatory developments due to a variety of factors such as local, regional, national and global economic conditions, interest rates and tax considerations.

8. Credit Facility


FGR-20		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

9. Fair Value Measurements

•

Level 1 – quoted prices in active markets for identical financial instruments

•

Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

•

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2018, in valuing the Fund’s assets carried at fair value, is as follows:


	Level 1		Level 2		Level 3		Total

Assets:
Investments in Securities:^a
Equity Investments	$	168,192,664	$	—	$	—	$	168,192,664
Short Term Investments		—		740,517		—		740,517

Total Investments in Securities	$	168,192,664	$	740,517	$	—	$	168,933,181

^aFor detailed categories, see the accompanying Statement of Investments.

10. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations


Selected Portfolio

IDR		International Depositary Receipt

REIT		Real Estate Investment Trust


		Semiannual Report			FGR-21

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Franklin Growth and Income VIP Fund

This semiannual report for Franklin Growth and Income VIP Fund covers the period ended June 30, 2018.

Class 1 Performance Summary as of June 30, 2018

The Fund’s Class 1 Shares had a -0.30% total return* for the six-month period ended June 30, 2018.

*The Fund has an expense reduction contractually guaranteed through 4/30/19. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.


		Semiannual Report			FGI-1

FRANKLIN GROWTH AND INCOME VIP FUND

Fund Goal and Main Investments

The Fund seeks capital appreciation with current income as a secondary goal. Under normal market conditions, the Fund invests predominantly in equity securities, including common stock, preferred stock and securities convertible into common stock.

Fund Risks

All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Growth stock prices reflect projections of future earnings or revenues, and can, therefore, fall dramatically if the company fails to meet those projections. Value securities may not increase in price as anticipated or may decline further if other investors fail to recognize the company’s value or favor investing in faster growing companies. Because the Fund can only distribute what it earns, the Fund’s distributions to shareholders may decline when prevailing interest rates fall, when dividend income from investments in stocks decline, or when the Fund experiences defaults on debt securities it holds. To the extent the Fund focuses on particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risks of adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Fund’s benchmark, the Standard & Poor’s^® 500 Index (S&P 500^®), produced a +2.65% total return.¹ The Fund’s peers, as measured by the Lipper VIP Equity Income Funds Classification Average, had a -1.26% total return for the same period.²

Portfolio Composition

Based on Total Net Assets as of 6/30/18

LOGO

Economic and Market Overview

The US economy continued to grow during the six months under review. After moderating for three consecutive quarters, the economy grew faster in 2018’s second quarter, driven by consumer spending, exports, business investment and government spending. The manufacturing and services sectors expanded during the period. The unemployment rate declined slightly from 4.1% in December 2017, as reported at the beginning of the six-month period, to 4.0% at period-end.³ Annual inflation, as measured by the Consumer Price Index, increased from 2.1% in December 2017, as reported at the beginning of the period, to 2.9% at period-end.³

1. Source: Morningstar.

2. Source: Lipper, a Thomson Reuters Company.

One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

3. Source: Bureau of Labor Statistics.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).


FGI-2		Semiannual Report

FRANKLIN GROWTH AND INCOME VIP FUND

In February 2018, the new US Federal Reserve (Fed) Chair Jerome Powell spoke before Congress for the first time and indicated the Fed saw signs of a continued strong labor market and economic growth. He reiterated the Fed’s intention to gradually raise interest rates in an effort to keep the economy from overheating and as inflation increases toward the Fed’s target. However, he noted there was no evidence of the economy overheating and he had yet to see a clear upward move in wages. The Fed raised its target range for the federal funds rate 0.25% each at its March and June 2018 meetings to 1.75%–2.00% and continued reducing its balance sheet as part of its ongoing plan to normalize monetary policy. In June, the Fed upgraded its economic forecast for 2018 and its inflation forecasts for 2018 and 2019. Furthermore, the Fed forecasted an additional rate hike for 2018 and 2019 than previously anticipated.

US equity markets rose overall during the period, benefiting from mostly upbeat economic data and better US corporate earnings. At certain points during the period, markets were also supported by the expectations of gradual rate increases. After reaching new all-time highs in January 2018, US stocks declined in February amid concerns that strong economic growth and rising inflation would lead the Fed to increase its target rate faster than expected. In March, markets were pressured further by a broad sell-off in information technology (IT) stocks due to a potential for tighter regulation in the sector arising from concerns about consumer data privacy. Other factors that curbed investor sentiment included tensions between the US and North Korea, political uncertainties in the US, the Trump administration’s protectionist policies and escalating trade tensions between the US and China. An overall easing of tensions in the Korean peninsula and intermittent US-China trade negotiations partially offset some of these concerns. However, US trade disputes with its allies and China near period-end dampened investor sentiment. In this environment, the broad US stock market, as measured by the S&P 500, generated a +2.65% total return for the period.¹

Investment Strategy

We seek to invest in a broadly diversified portfolio of equity securities that we consider to be financially strong, with a focus on “blue chip” companies. We apply a bottom-up approach to investing in individual securities. We will assess the market price of a company’s securities relative to our evaluation of the company’s long-term earnings, asset value and cash flow potential. We also consider a company’s price/earnings ratio, profit margins, balance sheet and liquidation value. We consider dividend yield and the opportunity for dividend growth in selecting stocks for the Fund because we believe that,


Top 10 Holdings
6/30/18
Company *Sector/Industry*	% of Total Net Assets
JPMorgan Chase & Co. Financials		4.3%
Microsoft Corp. Information Technology		3.9%
Wells Fargo & Co. Financials		3.0%
Chevron Corp. Energy		2.7%
PepsiCo Inc. Consumer Staples		2.4%
BlackRock Inc. Financials		2.2%
Morgan Stanley Financials		2.1%
Medtronic PLC Health Care		2.1%
Pfizer Inc. Health Care		2.1%
U.S. Bancorp Financials		2.1%

over time, dividend income can contribute significantly to total return and can be a more consistent source of investment return than capital appreciation. We seek to take advantage of price dislocations that result from the market’s short-term focus and choose to invest in those companies that, in our opinion, offer the best trade-off between growth opportunity, business and financial risk, and valuation.

Manager’s Discussion

During the period under review, sectors that rose in value among the Fund’s investments included IT, energy and health care. In contrast, the industrials, consumer staples and financials sectors declined.

In the IT sector, software and services firm Microsoft benefited absolute performance due to demand for its suite of office and cloud-based products, as well as its cloud services. The company is a beneficiary of healthy levels of corporate spending for the IT services industry. Software and equipment company Apple also benefited results. The company reported a solid fiscal second quarter, supported by strong growth in services, and it issued guidance for its fiscal third quarter that was above consensus expectations. Other contributors in the sector included networking firm Cisco Systems.

In energy, oil and gas exploration and production company Anadarko Petroleum contributed to performance, as it reported


		Semiannual Report		FGI-3

FRANKLIN GROWTH AND INCOME VIP FUND

solid quarterly results and raised its full-year 2018 guidance. In addition, the company has shifted its focus from production growth to delivering free cash flow back to shareholders. Oil and gas producer Occidental Petroleum also benefited results in the sector.

In the health care sector, diversified managed care company UnitedHealth Group and pharmaceutical firm Merck contributed to performance. Merck’s Keytruda product has seen promising early results in addressing lung cancer.

Other notable contributors included online retailer and cloud services provider Amazon.com.

In contrast, the industrials, consumer staples and financials sectors detracted from the Fund’s absolute performance. Within industrials, engine manufacturer Cummins hindered results amid concerns the North American truck market may be peaking. Industrial conglomerate General Electric (GE) also hindered performance in the sector. GE’s shares declined due to lower-than-expected cash flow generation and a dividend reduction. Near period-end, the company announced its intention to spin off its health care business, a move we view as positive. In addition, GE has been focused on cutting costs and reducing its debt load. Machinery firm Stanley Black & Decker also detracted from results in the industrials sector due to fears around trade tariffs.

In the consumer staples sector, consumer products manufacturer Procter & Gamble detracted from results. Despite reporting earnings that slightly exceeded consensus expectations, the company’s shares declined, largely due to a soft pricing environment amid increased competition. In addition, the company’s organic growth rate came in below consensus expectations. Other detractors in the sector included food and beverage companies Kraft Heinz and PepsiCo.

In financials, large bank Wells Fargo and financial services firm Morgan Stanley detracted from absolute performance. In general, financials stocks underperformed during the period as changes in interest rates and the yield curve seemed to indicate a less robust period for profits in the sector.

What is the yield curve?

A yield curve is a line that plots the yield to maturity of bonds having equal credit quality against their maturity dates.

will be worth fewer US dollars. This can have a negative effect on Fund performance. Conversely, when the US dollar weakens in relation to a foreign currency, an investment traded in that foreign currency will increase in value, which can contribute to Fund performance. For the six months ended June 30, 2018, the US dollar rose in value relative to most currencies. As a result, the Fund’s performance was negatively affected by the portfolio’s small portion of investment in securities with non-US currency exposure.

Thank you for your participation in Franklin Growth and Income VIP Fund. We look forward to serving your future investment needs.


FGI-4		Semiannual Report

FRANKLIN GROWTH AND INCOME VIP FUND

Class 1 Fund Expenses

Actual Fund Expenses

The table below provides information about the actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of ongoing Fund expenses but does not include the effect of ongoing Contract expenses, is used to calculate the “Ending Account Value.” You can estimate the Fund-level expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number under the headings “Actual” and “Fund-Level Expenses Paid During Period” (if Fund-Level Expenses Paid During Period were $ 7.50, then 8.6 × $7.50= $64.50). In this illustration, the estimated expenses paid this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Actual
(actual return after expenses)

Hypothetical
(5% annual return before expenses)

Share Class

Beginning Account
Value 1/1/18

Ending Account
Value 6/30/18

Fund-Level
Expenses Paid
During Period
1/1/18–6/30/18

^1,2

Ending Account
Value 6/30/18

Fund-Level
Expenses Paid
During Period
1/1/18–6/30/18

^1,2

Net
Annualized
Expense
Ratio

Class 1

$1,000

$997.00

$2.92

$1,021.87

$2.96

0.59%

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above — in the far right column — multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include any ongoing expenses of the Contract for which the Fund is an investment option or acquired fund fees and expenses.


		Semiannual Report		FGI-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Growth and Income VIP Fund


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 1
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$16.32			$15.97			$15.94			$17.02			$15.97			$12.64


Income from investment operations^a:

Net investment income^b		0.15			0.35			0.40			0.45			0.53	^c		0.33

Net realized and unrealized gains (losses)		(0.19	)		2.04			1.33			(0.54	)		0.95			3.40

Total from investment operations		(0.04	)		2.39			1.73			(0.09	)		1.48			3.73


Less distributions from:

Net investment income		(0.43	)		(1.03	)		(0.46	)		(0.61	)		(0.43	)		(0.40	)

Net realized gains		(0.43	)		(1.01	)		(1.24	)		(0.38	)		—			—

Total distributions		(0.86	)		(2.04	)		(1.70	)		(0.99	)		(0.43	)		(0.40	)

Net asset value, end of period		$15.42			$16.32			$15.97			$15.94			$17.02			$15.97


Total return^d		(0.30)%			16.15%			11.86%			(0.62)%			9.40%			29.96%

Ratios to average net assets^e

Expenses before waiver and payments by affiliates		0.71%			0.72%			0.59%			0.58%			0.57%			0.58%

Expenses net of waiver and payments by affiliates		0.59%^f			0.59%	^f		0.59%	^f,g		0.58%			0.57%^f			0.58%^f

Net investment income		1.89%			2.21%			2.38%			2.74%			3.26%^c			2.29%

Supplemental data

Net assets, end of period (000’s)		$34,518			$35,865			$29,829			$144,663			$168,961			$175,860

Portfolio turnover rate		11.54%			33.91%			40.59%	^h		48.81%			20.54%			35.16%

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.12 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.53%.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^hExcludes the value of portfolio securities delivered as a result of a redemption in-kind.


FGI-6		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Growth and Income VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 2
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$16.02			$15.69			$15.68			$16.76			$15.73			$12.46


Income from investment operations^a:

Net investment income^b		0.13			0.31			0.30			0.40			0.48	^c		0.29

Net realized and unrealized gains (losses)		(0.19	)		2.00			1.37			(0.54	)		0.94			3.35

Total from investment operations		(0.06	)		2.31			1.67			(0.14	)		1.42			3.64


Less distributions from:

Net investment income		(0.39	)		(0.97	)		(0.42	)		(0.56	)		(0.39	)		(0.37	)

Net realized gains		(0.43	)		(1.01	)		(1.24	)		(0.38	)		—			—

Total distributions		(0.82	)		(1.98	)		(1.66	)		(0.94	)		(0.39	)		(0.37	)

Net asset value, end of period		$15.14			$16.02			$15.69			$15.68			$16.76			$15.73


Total return^d		(0.44)%			15.85%			11.62%			(0.91)%			9.14%			29.60%

Ratios to average net assets^e

Expenses before waiver and payments by affiliates		0.96%			0.97%			0.84%			0.83%			0.82%			0.83%

Expenses net of waiver and payments by affiliates		0.84%	^f		0.84%	^f		0.84%	^f,g		0.83%			0.82%	^f		0.83%	^f

Net investment income		1.64%			1.96%			2.13%			2.49%			3.01%	^c		2.04%

Supplemental data

Net assets, end of period (000’s)		$70,076			$74,105			$69,474			$124,691			$138,191			$150,966

Portfolio turnover rate		11.54%			33.91%			40.59%	^h		48.81%			20.54%			35.16%

^bBased on average daily shares outstanding.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^hExcludes the value of portfolio securities delivered as a result of a redemption in-kind.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report		FGI-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2018 (unaudited)


Franklin Growth and Income VIP Fund
		Country		Shares		Value
	Common Stocks 85.3%
	Consumer Discretionary 4.8%
	Comcast Corp., A		United States		29,500	$	967,895
	Las Vegas Sands Corp.		United States		14,700		1,122,492
	Lowe’s Cos. Inc.		United States		8,348		797,818
	McDonald’s Corp.		United States		7,000		1,096,830
	Target Corp.		United States		13,380		1,018,486

							5,003,521

	Consumer Staples 7.1%
	Anheuser-Busch InBev SA/NV, ADR		Belgium		5,937		598,212
	The Kraft Heinz Co.		United States		10,981		689,827
	PepsiCo Inc.		United States		22,598		2,460,244
	The Procter & Gamble Co.		United States		27,600		2,154,456
	Walmart Inc.		United States		18,100		1,550,265

							7,453,004

	Energy 9.2%
	Anadarko Petroleum Corp.		United States		3,518		257,694
	Chevron Corp.		United States		22,368		2,827,986
	Exxon Mobil Corp.		United States		22,277		1,842,976
	Occidental Petroleum Corp.		United States		16,300		1,363,984
	ONEOK Inc.		United States		12,900		900,807
	Royal Dutch Shell PLC, A, ADR		United Kingdom		20,213		1,399,346
	Suncor Energy Inc.		Canada		25,382		1,032,540

							9,625,333

	Financials 19.6%
	Arthur J. Gallagher & Co.		United States		14,566		950,869
	Bank of America Corp.		United States		66,300		1,868,997
	BB&T Corp.		United States		35,276		1,779,321
	BlackRock Inc.		United States		4,561		2,276,121
	The Charles Schwab Corp.		United States		4,703		240,323
	JPMorgan Chase & Co.		United States		43,000		4,480,600
	MetLife Inc.		United States		32,500		1,417,000
	Morgan Stanley		United States		47,337		2,243,774
	U.S. Bancorp		United States		43,355		2,168,617
	Wells Fargo & Co.		United States		56,350		3,124,044

							20,549,666

	Health Care 11.8%
	Baxter International Inc.		United States		8,500		627,640
	Eli Lilly & Co.		United States		16,137		1,376,970
	Johnson & Johnson		United States		15,865		1,925,059
	Medtronic PLC		United States		26,181		2,241,355
	Merck & Co. Inc.		United States		32,500		1,972,750
	Pfizer Inc.		United States		60,963		2,211,738
	UnitedHealth Group Inc.		United States		8,100		1,987,254

							12,342,766

	Industrials 10.4%
	Cummins Inc.		United States		10,669		1,418,977
	General Electric Co.		United States		26,232		357,017
	Illinois Tool Works Inc.		United States		5,111		708,078
	Lockheed Martin Corp.		United States		4,869		1,438,449
	Norfolk Southern Corp.		United States		8,800		1,327,656
	Raytheon Co.		United States		10,516		2,031,481


FGI-8		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)


		Country		Shares		Value
	Common Stocks (continued)
	Industrials (continued)
	Republic Services Inc.		United States		27,180	$	1,858,025
	Stanley Black & Decker Inc.		United States		5,432		721,424
	United Technologies Corp.		United States		7,834		979,485

							10,840,592

	Information Technology 12.1%
	Apple Inc.		United States		11,032		2,042,134
	Broadcom Inc.		United States		4,433		1,075,623
	Cisco Systems Inc.		United States		41,789		1,798,181
	Intel Corp.		United States		18,657		927,439
	Microsoft Corp.		United States		41,876		4,129,392
	Oracle Corp.		United States		18,829		829,606
	Texas Instruments Inc.		United States		16,996		1,873,809

							12,676,184

	Materials 4.7%
	BASF SE		Germany		12,737		1,218,925
	DowDuPont Inc.		United States		25,573		1,685,772
	International Paper Co.		United States		22,220		1,157,218
	Praxair Inc.		United States		5,300		838,195

							4,900,110

	Real Estate 1.7%
	Equity Residential		United States		7,000		445,830
	Host Hotels & Resorts Inc.		United States		65,641		1,383,056

							1,828,886

	Telecommunication Services 2.3%
	Rogers Communications Inc., B		Canada		6,044		286,848
	TELUS Corp.		Canada		23,000		817,304
	Verizon Communications Inc.		United States		25,110		1,263,284

							2,367,436

	Utilities 1.6%
	Xcel Energy Inc.		United States		35,496		1,621,457


	Total Common Stocks (Cost $61,010,406)						89,208,955

a	Equity-Linked Securities 8.1%
	Consumer Discretionary 1.3%
b	Well Fargo Bank NA into Amazon.com Inc., 6.00%, 144A		United States		800		1,334,921

	Energy 1.6%
b	Citigroup Global Markets Holdings Inc. into Anadarko Petroleum Corp., 6.00%, 144A		United States		17,000		998,557
b	Credit Suisse AG London into Schlumberger Ltd., 6.50%, 144A		United States		10,300		715,353

							1,713,910

	Financials 2.1%
b	Deutsche Bank AG London into Bank of America Corp., 6.50%, 144A		United States		44,000		1,187,313
b	UBS AG London into The Charles Schwab Corp., 6.50%, 144A.		United States		20,000		1,024,012

							2,211,325

	Health Care 0.6%
b	Deutsche Bank AG London into Baxter International Inc., 4.50%, 144A		United States		8,000		578,331


		Semiannual Report			FGI-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

Country

Shares

Value

Equity-Linked Securities (continued)

Information Technology 2.5%

Credit Suisse AG London into Broadcom Inc., 8.50%, 144A

United States

3,500

867,466

UBS AG London into Intel Corp., 7.00%, 144A

United States

40,000

1,731,251

2,598,717

Total Equity-Linked Securities (Cost $8,034,610)

8,437,204

Convertible Preferred Stocks 4.1%

Health Care 1.8%

Becton Dickinson and Co., 6.125%, cvt. pfd., A

United States

30,200

1,867,870

Industrials 0.3%

Fortive Corp., 5.00%, cvt. pfd

United States

350

358,958

Utilities 2.0%

NextEra Energy Inc., 6.371%, cvt. pfd

United States

28,277

2,101,688

Total Convertible Preferred Stocks (Cost $3,425,449)

4,328,516

Total Investments before Short Term Investments
(Cost $72,470,465)

101,974,675

Principal Amount

Short Term Investments (Cost $2,763,489) 2.6%

Repurchase Agreements 2.6%

Joint Repurchase Agreement, 2.10%, 7/02/18 (Maturity Value $2,763,973)

BNP Paribas Securities Corp. (Maturity Value $991,879)

Deutsche Bank Securities Inc. (Maturity Value $36,291)

HSBC Securities (USA) Inc. (Maturity Value $1,735,803)

Collateralized by U.S. Government Agency Securities, 0.00% - 3.625%, 9/18/18 -6/19/23; ^eU.S. Treasury Bill, 10/04/18 - 10/18/18; and U.S. Treasury Note, 2.00% -3.50%, 5/15/20 - 8/31/21 (valued at $2,820,330)

United States

2,763,489

Total Investments (Cost $75,233,954) 100.1%

104,738,164

Other Assets, less Liabilities (0.1)%

(144,332

)

Net Assets 100.0%

104,593,832

See Abbreviations on page FGI-20.

^aSee Note 1(d) regarding equity-linked securities.

^bSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2018, the aggregate value of these securities was $8,437,204 representing 8.1% of net assets.

^cNon-income producing.

^dSee Note 1(c) regarding joint repurchase agreement.

^eThe security was issued on a discount basis with no stated coupon rate.


FGI-10		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2018 (unaudited)


	Franklin Growth and Income VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	72,470,465
Cost - Unaffiliated repurchase agreements		2,763,489

Value - Unaffiliated issuers	$	101,974,675
Value - Unaffiliated repurchase agreements		2,763,489
Receivables:
Dividends		129,775
Other assets		73

Total assets		104,868,012

Liabilities:
Payables:
Investment securities purchased		125,537
Capital shares redeemed		26,389
Management fees		43,574
Distribution fees		29,777
Reports to shareholders		27,115
Professional fees		18,976
Accrued expenses and other liabilities		2,812

Total liabilities		274,180

Net assets, at value	$	104,593,832

Net assets consist of:
Paid-in capital	$	72,314,075
Undistributed net investment income		839,077
Net unrealized appreciation (depreciation)		29,503,104
Accumulated net realized gain (loss)		1,937,576

Net assets, at value	$	104,593,832


Class 1:
Net assets, at value	$	34,518,204

Shares outstanding		2,238,309

Net asset value and maximum offering price per share	$	15.42


Class 2:
Net assets, at value	$	70,075,628

Shares outstanding		4,627,949

Net asset value and maximum offering price per share	$	15.14


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FGI-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2018 (unaudited)


	Franklin Growth and Income VIP Fund
Investment income:
Dividends: (net of foreign taxes)*
Unaffiliated issuers	$	1,307,939
Interest:
Unaffiliated issuers		15,065

Total investment income		1,323,004

Expenses:
Management fees (Note 3a)		329,284
Distribution fees: (Note 3c)
Class 2		89,713
Custodian fees (Note 4)		633
Reports to shareholders		24,515
Professional fees		19,563
Trustees’ fees and expenses		267
Other		4,542

Total expenses		468,517
Expense reductions (Note 4)		(36	)
Expenses waived/paid by affiliates (Note 3e)		(63,380	)

Net expenses		405,101

Net investment income		917,903

Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		2,016,462
Realized gain distributions from REITs		6,663
Foreign currency transactions		3,550

Net realized gain (loss)		2,026,675

Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(3,310,601	)
Translation of other assets and liabilities denominated in foreign currencies		(1,230	)

Net change in unrealized appreciation (depreciation)		(3,311,831	)

Net realized and unrealized gain (loss)		(1,285,156	)

Net increase (decrease) in net assets resulting from operations	$	(367,253	)

*Foreign taxes withheld on dividends	$	23,741


FGI-12		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets


	Franklin Growth and Income VIP Fund
	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	917,903		$	2,171,299
Net realized gain (loss)		2,026,675			3,278,575
Net change in unrealized appreciation (depreciation)		(3,311,831	)		10,412,049

Net increase (decrease) in net assets resulting from operations		(367,253	)		15,861,923

Distributions to shareholders from:
Net investment income:
Class 1		(923,422	)		(2,052,142	)
Class 2		(1,730,668	)		(4,282,950	)
Net realized gains:
Class 1		(921,717	)		(2,005,313	)
Class 2		(1,908,988	)		(4,458,397	)

Total distributions to shareholders		(5,484,795	)		(12,798,802	)

Capital share transactions: (Note 2)
Class 1		584,833			5,020,919
Class 2		(108,151	)		2,582,809

Total capital share transactions		476,682			7,603,728

Net increase (decrease) in net assets		(5,375,366	)		10,666,849
Net assets:
Beginning of period		109,969,198			99,302,349

End of period	$	104,593,832		$	109,969,198

Undistributed net investment income included in net assets:
End of period	$	839,077		$	2,575,264


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FGI-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Growth and Income VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eighteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Growth and Income VIP Fund (Fund) is included in this report. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers two classes of shares: Class 1 and Class 2. Each class of shares may differ by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded, or as of 4 p.m. Eastern time. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the day that the value of the security is determined. Over-the-counter (OTC) securities are

valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.

Investments in repurchase agreements are valued at cost, which approximates fair value.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before 4 p.m. Eastern time. In addition, trading in certain foreign markets may not take place on every Fund’s business day. Occasionally, events occur between the time at which trading in a foreign security is completed and 4 p.m. Eastern time that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at 4 p.m. Eastern time. In order to minimize the potential for these differences, the VC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against


FGI-14		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

b. Foreign Currency Translation

exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period.

c. Joint Repurchase Agreement

d. Equity-Linked Securities

The Fund invests in equity-linked securities. Equity-linked securities are hybrid financial instruments that generally combine both debt and equity characteristics into a single note form. Income received from equity-linked securities is recorded as realized gains in the Statement of Operations and may be based on the performance of an underlying equity security, an equity index, or an option position. The risks of investing in equity-linked securities include unfavorable price movements in the underlying security and the credit risk of the issuing financial institution. There may be no guarantee of a return of


		Semiannual Report		FGI-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

d. Equity-Linked Securities (continued)

principal with equity-linked securities and the appreciation potential may be limited. Equity-linked securities may be more volatile and less liquid than other investments held by the Fund.

e. Income and Deferred Taxes

f. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Dividend income and realized gain distributions are recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not

available. In such cases, the dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

g. Accounting Estimates

h. Guarantees and Indemnifications


FGI-16		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 1 Shares:
Shares sold		46,225		$	754,375			273,799		$	4,396,906
Shares issued in reinvestment of distributions		117,600			1,845,139			272,130			4,057,455
Shares redeemed		(122,892	)		(2,014,681	)		(216,463	)		(3,433,442	)

Net increase (decrease)		40,933		$	584,833			329,466		$	5,020,919


Class 2 Shares:
Shares sold		56,298		$	899,267			304,558		$	4,865,372
Shares issued in reinvestment of distributions		236,188			3,639,656			596,679			8,741,347
Shares redeemed		(290,278	)		(4,647,074	)		(704,129	)		(11,023,910	)

Net increase (decrease)		2,208		$	(108,151	)		197,108		$	2,582,809

3. Transactions with Affiliates


Subsidiary		Affiliation
Franklin Advisers, Inc. (Advisers)		Investment manager
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent

a. Management Fees

The Fund pays an investment management fee to Advisers based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
0.625%		Up to and including $100 million
0.500%		Over $100 million, up to and including $250 million
0.450%		Over $250 million, up to and including $7.5 billion
0.440%		Over $7.5 billion, up to and including $10 billion
0.430%		Over $10 billion, up to and including $12.5 billion
0.420%		Over $12.5 billion, up to and including $15 billion
0.400%		In excess of $15 billion

For the period ended June 30, 2018, the annualized gross effective investment management fee rate was 0.616% of the Fund’s average daily net assets.

b. Administrative Fees

Under an agreement with Advisers, FT Services provides administrative services to the Fund. The fee is paid by Advisers based on the Fund’s average daily net assets, and is not an additional expense of the Fund.


		Semiannual Report		FGI-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

3. Transactions with Affiliates (continued)

c. Distribution Fees

d. Transfer Agent Fees

Investor Services, under terms of an agreement, performs shareholder servicing for the Fund and is not paid by the Fund for the services.

e. Waiver and Expense Reimbursements

Advisers has contractually agreed in advance to waive or limit its fees and to assume as its own expense certain expenses otherwise payable by the Fund so that the expenses (excluding distribution fees and acquired fund fees and expenses), for each class of the Fund do not exceed 0.59% based on the average net assets of each class (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until April 30, 2019. Total expenses waived or paid are not subject to recapture subsequent to the Fund’s fiscal year end.

4. Expense Offset Arrangement

5. Income Taxes

At June 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


Cost of investments	$	75,340,979

Unrealized appreciation	$	30,540,942
Unrealized depreciation		(1,143,757	)

Net unrealized appreciation (depreciation)	$	29,397,185

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of equity-linked securities and bond discounts and premiums.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2018, aggregated $12,123,232 and $16,183,996, respectively.


FGI-18		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

7. Credit Facility

8. Fair Value Measurements

•

Level 1 – quoted prices in active markets for identical financial instruments

•

Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

•

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2018, in valuing the Fund’s assets carried at fair value, is as follows:


	Level 1		Level 2		Level 3		Total

Assets:
Investments in Securities:^a
Equity Investments^b	$	93,537,471	$	—	$	—	$	93,537,471
Equity-Linked Securities		—		8,437,204		—		8,437,204
Short Term Investments		—		2,763,489		—		2,763,489

Total Investments in Securities	$	93,537,471	$	11,200,693	$	—	$	104,738,164

^aFor detailed categories, see the accompanying Statement of Investments.

^bIncludes common and convertible preferred stocks.

9. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.


		Semiannual Report		FGI-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

Abbreviations


Selected Portfolio

ADR		American Depositary Receipt


FGI-20		Semiannual Report

Franklin Income VIP Fund

This semiannual report for Franklin Income VIP Fund covers the period ended June 30, 2018.

Class 1 Performance Summary as of June 30, 2018

The Fund’s Class 1 Shares posted a +0.87% total return* for the six-month period ended June 30, 2018.


		Semiannual Report		FI-1

FRANKLIN INCOME VIP FUND

Fund Goal and Main Investments

The Fund seeks to maximize income, while maintaining prospects for capital appreciation. Under normal market conditions, the Fund invests in a diversified portfolio of debt and equity securities.

Fund Risks

All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. The Fund’s portfolio includes a substantial portion of higher yielding, lower rated corporate bonds because of the relatively higher yields they offer. The Fund’s share price and yield will be affected by interest rate movements. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks that are heightened in developing countries. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. For comparison, the Fund’s equity benchmark, the Standard & Poor’s^® 500 Index (S&P 500^®), posted a +2.65% total return, and its fixed income benchmark, the Bloomberg Barclays US Aggregate Bond Index, had a -1.62% total return for the same period.¹

Economic and Market Overview


Portfolio Composition
6/30/18
	% of Total Net Assets
Equity*		48.7%
Utilities		7.0%
Energy		7.0%
Financials		6.9%
Health Care		5.6%
Information Technology		5.1%
Consumer Discretionary		3.9%
Consumer Staples		3.9%
Industrials		3.6%
Materials		3.5%
Telecommunication Services		1.6%
Real Estate		0.6%
Fixed Income		47.6%
Health Care		11.6%
Financials		10.8%
Energy		7.8%
Consumer Discretionary		6.6%
Telecommunication Services		3.1%
Information Technology		1.8%
Utilities		1.7%
Industrials		1.7%
Consumer Staples		1.0%
Materials		0.9%
Real Estate		0.6%
Short-Term Investments & Other Net Assets		3.7%

*Includes convertible bonds.

beginning of the six-month period, to 4.0% at period-end.² Annual inflation, as measured by the Consumer Price Index, increased from 2.1% in December 2017, as reported at the beginning of the period, to 2.9% at period-end.²

1. Source: Morningstar.

One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

2. Source: Bureau of Labor Statistics.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).


FI-2		Semiannual Report

FRANKLIN INCOME VIP FUND

funds rate 0.25% each at its March and June 2018 meetings to 1.75%–2.00% and continued reducing its balance sheet as part of its ongoing plan to normalize monetary policy. In June, the Fed upgraded its economic forecast for 2018 and its inflation forecasts for 2018 and 2019. Furthermore, the Fed forecasted an additional rate hike for 2018 and 2019 than previously anticipated.

The 10-year Treasury yield, which moves inversely to its price, increased during the period. The yield rose to multi-year highs in February, April and May amid indications of higher inflation. However, some factors weighed on the Treasury yield at certain points during the period, including concerns about political turmoil in Italy, political uncertainties in the US, the Trump administration’s protectionist trade policies, and US trade disputes between its allies and China. Overall, the 10-year Treasury yield rose from 2.40% at the beginning of the period to 2.85% at period-end.

Investment Strategy

We search for undervalued or out-of-favor securities we believe offer opportunities for income today and significant growth tomorrow. We generally perform independent analysis of the debt securities being considered for the Fund’s portfolio, as opposed to relying principally on ratings assigned by rating agencies. In analyzing debt and equity securities, we consider a variety of factors, including a security’s relative value based on such factors as anticipated cash flow, interest or dividend coverage, asset coverage, and earnings prospects; the experience and strength of a company’s management; a company’s changing financial condition and market recognition of the change; a company’s sensitivity to changes in interest rates and business conditions; and a company’s debt maturity schedules and borrowing requirements.

Manager’s Discussion

During the six months under review, we actively continued to manage the Fund’s multi-asset strategy relative to the opportunities available to us, while also remaining focused on bottom-up investing and individual security selection. Our view has been that the investment performance of securities within the Fund should be driven primarily by company-specific initiatives and opportunities, and secondarily by broader market or interest-rate movements. We strategically reduced our equity weighting from 56.6% to 48.7% due to relative value concerns and market strength versus other asset classes, as well as higher realized and anticipated volatility. We increased our fixed


Top Five Equity Holdings
6/30/18
Company *Sector/Industry*	% of Total Net Assets
Wells Fargo & Co. Banks		2.4%
The Southern Co. Utilities		1.8%
Dominion Energy Inc. Utilities		1.8%
General Electric Co. Industrials		1.5%
Sempra Energy Utilities		1.5%

income weighting from 36.4% to 47.6% as interest rates rose. The Fund’s cash position decreased from 7.0% to 3.7% of total net assets.

Within equity, most sectors represented in the Fund’s portfolio delivered positive returns, with the largest contributions to absolute performance coming from information technology (IT), energy and consumer discretionary.

Within the IT sector, Microsoft, Apple and Intel contributed significantly to absolute results. In energy, companies levered to an improvement in oil prices tended to perform well, including oil and gas exploration and production companies Anadarko Petroleum, Royal Dutch Shell, Chevron, BP, Occidental Petroleum and Halliburton³. We took advantage of recent strength to reduce our positions in Royal Dutch Shell, BP and Chevron, while we added to our position in Exxon Mobile as the company has underperformed its peers thus far this year. In the consumer discretionary sector, retailer Target and automobile manufacturer General Motors³ benefited absolute results, and we reduced our holdings in the companies during the period.

In utilities, we increased our position as the sector came under pressure from rising interest rates and the negative impact of tax law changes. We added to our existing positions in Southern Co., Sempra Energy and Dominion Energy, and we initiated a position in Xcel Energy.

Equity sectors that detracted from the Fund’s absolute performance included financials, largely due to fears of an economic slowdown and potential weaker loan growth. Company-specific concerns led to weakness in large bank Wells Fargo, insurer MetLife and mortgage company Fannie

3. Not held at period-end.


		Semiannual Report		FI-3

FRANKLIN INCOME VIP FUND

Mae. The industrials sector also hindered results, largely due to weakness in shares of industrial conglomerate General Electric. The consumer staples sector declined and detracted from performance, largely driven by concerns regarding growth in emerging-market economies and company-specific issues. Key sector detractors during the period included tobacco firm Philip Morris International, food and beverage company PepsiCo and beverages manufacturer Anheuser-Busch Inbev.

In fixed income, most sectors and industries represented in the Fund contributed to absolute performance, largely due to our bias toward issuers with strong credit fundamentals and bonds with shorter maturities. Hospitals and pharmaceuticals companies recovered during the period as fundamentals stabilized or improved and as upcoming maturities were extended.⁴ Contributors included hospital operator Community Health Systems, which addressed its short-term debt maturities through a successful exchange into new debt with better seniority. Fundamentals for health care services provider Tenet Healthcare stabilized, which supported its debt securities. Pharmaceuticals and medical devices firm Valeant Pharmaceuticals International also benefited the Fund’s absolute performance as it continued to make progress on improving its balance sheet.

Energy holdings generally performed well during the period amid higher oil prices and stable natural gas markets. Key contributors included Chesapeake Energy, W&T Offshore, Weatherford International, Ascent Resources Utica Holdings and Calumet Specialty Products.

Our position in DISH DBS was the main detractor during the period as its nationwide satellite video business experienced subscriber losses, due to secular changes within the industry, and as competing spectrum blocks on offer impacted the perceived value of its spectrum portfolio. However, the company continued to generate strong free cash flow to service its debt with strong asset coverage from the underlying value of its pay TV business. Smaller positions such as Belk, Rex Energy³ and Sanchez Energy also detracted. Department store operator Belk suffered from worsening comparable store sales and a decline in profitability, while the two energy holdings were impacted by their excessive debt balances amid a decline in US benchmark crude oil prices from recent highs.

During the reporting period, we modestly increased our exposure to corporate securities through select purchases of investment-grade corporate bonds, which have generally


Top Five Fixed Income Holdings and Senior Floating Rate Interests*
6/30/18
Company *Sector/Industry*	% of Total Net Assets
U.S. Treasury Note Financials		6.5%
CHS/Community Health Systems Inc. Health Care		3.9%
Chesapeake Energy Corp. Energy		2.6%
Tenet Healthcare Corp. Health Care		2.0%
Weatherford International Ltd. Energy		1.7%

*Does not include convertible bonds.

underperformed both high-yield bonds and the broader fixed income asset class, as they looked more attractive to us on a relative value basis. Key additions included Capital One Financial, Citigroup, CVS Health, General Motors, Goldman Sachs and Mylan. We initiated a position in short- and intermediate-term US Treasury securities, with a particular emphasis on shorter maturities as interest rates moved up with Fed tightening. This move was largely in response to what we viewed as fuller valuations in many other asset classes, as well as a desire to help offset potentially higher volatility in the future.

Thank you for your participation in Franklin Income VIP Fund. We look forward to serving your future investment needs.

4. Hospitals and pharmaceuticals holdings are in health care in the fixed income section of the SOI.


FI-4		Semiannual Report

FRANKLIN INCOME VIP FUND

Class 1 Fund Expenses

Actual Fund Expenses

Hypothetical Example for Comparison with Other Mutual Funds

Actual
(actual return after expenses)

Hypothetical
(5% annual return before expenses)

Share Class

Beginning Account
Value 1/1/18

Ending Account
Value 6/30/18

Fund-Level
Expenses Paid
During Period
1/1/18–6/30/18

^1,2

Ending Account
Value 6/30/18

Fund-Level
Expenses Paid
During Period
1/1/18–6/30/18

^1,2

Net
Annualized
Expense
Ratio

Class 1

$1,000

$1,008.70

$2.24

$1,022.56

$2.26

0.45%

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above — in the far right column — multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include any ongoing expenses of the Contract for which the Fund is an investment option or acquired fund fees and expenses.


		Semiannual Report			FI-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Income VIP Fund


	Six Months Ended June 30, 2018			Year Ended December 31,
	(unaudited)			2017			2016			2015			2014			2013
Class 1
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$16.72			$15.87			$14.64			$16.48			$16.53			$15.47


Income from investment operations^a:

Net investment income^b		0.37			0.69			0.67			0.71			0.72			0.81

Net realized and unrealized gains (losses)		(0.22	)		0.87			1.34			(1.78	)		0.11			1.31

Total from investment operations		0.15			1.56			2.01			(1.07	)		0.83			2.12

Less distributions from net investment income		(0.82	)		(0.71	)		(0.78	)		(0.77	)		(0.88	)		(1.06	)

Net asset value, end of period		$16.05			$16.72			$15.87			$14.64			$16.48			$16.53


Total return^c		0.87%			9.94%			14.33%			(6.84)%			4.92%			14.18%

Ratios to average net assets^d

Expenses before waiver and payments by affiliates		0.47%			0.47%			0.47%			0.46%			0.47%			0.47%

Expenses net of waiver and payments by affiliates^e		0.45%			0.45%			0.44%			0.46%^f			0.47%			0.47%

Net investment income		4.44%			4.22%			4.47%			4.47%			4.26%			5.07%

Supplemental data

Net assets, end of period (000’s)		$695,523			$735,149			$696,227			$604,228			$714,664			$695,004

Portfolio turnover rate		33.09%			20.96%			39.03%			31.53%			24.77%			21.71%

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fBenefit of waiver and payments by affiliates rounds to less than 0.01%.


FI-6		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Income VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 2
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$16.17			$15.38			$14.20			$16.00			$16.07			$15.07


Income from investment operations^a:

Net investment income^b		0.33			0.63			0.61			0.65			0.66			0.75

Net realized and unrealized gains (losses)		(0.20	)		0.83			1.31			(1.73	)		0.11			1.27


Total from investment operations		0.13			1.46			1.92			(1.08	)		0.77			2.02


Less distributions from net investment income		(0.78	)		(0.67	)		(0.74	)		(0.72	)		(0.84	)		(1.02	)


Net asset value, end of period		$15.52			$16.17			$15.38			$14.20			$16.00			$16.07


Total return^c		0.76%			9.67%			14.02%			(7.05)%			4.62%			13.94%

Ratios to average net assets^d

Expenses before waiver and payments by affiliates		0.72%			0.72%			0.72%			0.71%			0.72%			0.72%

Expenses net of waiver and payments by affiliates^e		0.70%			0.70%			0.69%			0.71%^f			0.72%			0.72%

Net investment income		4.19%			3.97%			4.22%			4.22%			4.01%			4.82%

Supplemental data

Net assets, end of period (000’s)		$4,732,266			$5,041,498			$5,088,556			$4,907,599			$6,022,804			$6,188,045

Portfolio turnover rate		33.09%			20.96%			39.03%			31.53%			24.77%			21.71%

^bBased on average daily shares outstanding.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fBenefit of waiver and payments by affiliates rounds to less than 0.01%.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FI-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Income VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 4
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$16.53			$15.71			$14.49			$16.31			$16.36			$15.32


Income from investment operations^a:

Net investment income^b		0.33			0.62			0.61			0.65			0.66			0.75

Net realized and unrealized gains (losses)		(0.21	)		0.85			1.33			(1.76	)		0.11			1.30

Total from investment operations		0.12			1.47			1.94			(1.11	)		0.77			2.05


Less distributions from net investment income		(0.76	)		(0.65	)		(0.72	)		(0.71	)		(0.82	)		(1.01	)

Net asset value, end of period		$15.89			$16.53			$15.71			$14.49			$16.31			$16.36


Total return^c		0.72%			9.55%			13.87%			(7.15)%			4.52%			13.85%

Ratios to average net assets^d

Expenses before waiver and payments by affiliates		0.82%			0.82%			0.82%			0.81%			0.82%			0.82%

Expenses net of waiver and payments by affiliates^e		0.80%			0.80%			0.79%			0.81%^f			0.82%			0.82%

Net investment income		4.09%			3.87%			4.12%			4.12%			3.91%			4.72%

Supplemental data

Net assets, end of period (000’s)		$326,331			$335,217			$309,935			$306,023			$378,545			$397,652

Portfolio turnover rate		33.09%			20.96%			39.03%			31.53%			24.77%			21.71%

^bBased on average daily shares outstanding.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fBenefit of waiver and payments by affiliates rounds to less than 0.01%.


FI-8		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2018 (unaudited)


Franklin Income VIP Fund
		Country		Shares		Value
	Common Stocks 39.0%
	Consumer Discretionary 1.9%
	Comcast Corp., A		United States		800,000	$	26,248,000
	Ford Motor Co.		United States		3,138,995		34,748,675
	Target Corp.		United States		650,000		49,478,000

							110,474,675

	Consumer Staples 3.9%
	Anheuser-Busch InBev SA/NV, ADR		Belgium		512,500		51,639,500
	The Coca-Cola Co.		United States		700,000		30,702,000
	Nestle SA		Switzerland		400,000		31,058,158
	PepsiCo Inc.		United States		384,000		41,806,080
	Philip Morris International Inc.		United States		350,000		28,259,000
	The Procter & Gamble Co.		United States		500,000		39,030,000

							222,494,738

	Energy 5.7%
a	Anadarko Petroleum Corp.		United States		400,000		29,300,000
	Baker Hughes a GE Co., A		United States		725,000		23,946,750
	BP PLC, ADR		United Kingdom		750,000		34,245,000
	Chevron Corp.		United States		400,000		50,572,000
	Exxon Mobil Corp.		United States		500,000		41,365,000
	Occidental Petroleum Corp.		United States		286,000		23,932,480
	Royal Dutch Shell PLC, A, ADR		United Kingdom		1,100,000		76,153,000
b	Talos Energy Inc.		United States		506,006		16,257,973
	TransCanada Corp.		Canada		350,000		15,120,000
b	Weatherford International PLC		United States		143,200		471,128
	The Williams Cos. Inc.		United States		500,000		13,555,000

							324,918,331

	Financials 5.7%
	Bank of America Corp.		United States		1,000,000		28,190,000
	HSBC Holdings PLC		United Kingdom		3,500,000		32,849,263
	JPMorgan Chase & Co.		United States		600,000		62,520,000
	MetLife Inc.		United States		1,095,108		47,746,709
	U.S. Bancorp		United States		700,000		35,014,000
	Wells Fargo & Co.		United States		2,200,000		121,968,000

							328,287,972

	Health Care 5.1%
	AstraZeneca PLC		United Kingdom		900,000		62,434,003
	Eli Lilly & Co.		United States		300,000		25,599,000
	Johnson & Johnson		United States		230,000		27,908,200
a	Medtronic PLC		United States		525,000		44,945,250
	Merck & Co. Inc.		United States		806,100		48,930,270
	Pfizer Inc.		United States		2,238,975		81,230,013
	Sanofi, ADR		France		89,292		3,572,573

							294,619,309

	Industrials 2.5%
	3M Co.		United States		125,000		24,590,000
b,c	CEVA Logistics AG		Switzerland		283,295		6,378,320
	Cummins Inc.		United States		200,000		26,600,000
	General Electric Co.		United States		6,500,000		88,465,000

							146,033,320


		Semiannual Report		FI-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)


		Country		Shares		Value
	Common Stocks (continued)
	Information Technology 2.1%
	Analog Devices Inc.		United States		150,000	$	14,388,000
	Apple Inc.		United States		153,317		28,380,510
	Applied Materials Inc.		United States		286,000		13,210,340
	Microsoft Corp.		United States		632,500		62,370,825

							118,349,675

	Materials 3.5%
	BASF SE		Germany		700,000		66,989,684
	DowDuPont Inc.		United States		1,000,000		65,920,000
	Rio Tinto PLC, ADR		United Kingdom		1,250,000		69,350,000

							202,259,684

	Real Estate 0.6%
	Host Hotels & Resorts Inc.		United States		1,500,000		31,605,000

	Telecommunication Services 1.6%
	BCE Inc.		Canada		466,000		18,878,283
	Verizon Communications Inc.		United States		1,475,000		74,207,250

							93,085,533

	Utilities 6.4%
	Dominion Energy Inc.		United States		1,501,638		102,381,679
	Duke Energy Corp.		United States		702,500		55,553,700
	Sempra Energy		United States		720,000		83,599,200
	The Southern Co.		United States		2,250,000		104,197,500
	Xcel Energy Inc.		United States		500,000		22,840,000

							368,572,079


	Total Common Stocks (Cost $1,903,937,850)						2,240,700,316

d	Equity-Linked Securities 6.8%
	Consumer Discretionary 2.0%
e	Merrill Lynch International & Co. CV into General Motor Co., 8.00%, 144A		United States		1,425,000		58,006,287
e	Wells Fargo Bank National Assn. into Ford Motor Co., 8.50%, 144A		United States		2,500,000		28,463,517
e	Wells Fargo Bank National Assn. into Target Corp., 8.00%, 144A		United States		400,000		31,064,579

							117,534,383

	Energy 0.7%
e	UBS AG London into Halliburton Co., 7.00%, 144A		United States		840,000		39,402,742

	Industrials 1.1%
e	Deutsche Bank AG/London into Union Pacific Corp., 6.50%, 144A		United States		450,000		64,579,691

	Information Technology 3.0%
e	Citigroup Global Markets Holdings Inc. into Texas Instruments Inc., 7.00%, 144A		United States		520,000		58,197,667
e	Royal Bank of Canada into Apple Inc., 6.50%, 144A		United States		310,000		57,241,258
e	Wells Fargo Bank National Assn. into Intel Corp., 8.00%, 144A		United States		1,100,000		56,551,379

							171,990,304


	Total Equity-Linked Securities (Cost $410,123,900)						393,507,120

	Convertible Preferred Stocks 1.8%
	Financials 1.2%
	Bank of America Corp., 7.25%, cvt. pfd., L		United States		34,600		43,267,300
b	FNMA, 5.375%, cvt. pfd.		United States		475		9,262,500
	Wells Fargo & Co., 7.50%, cvt. pfd., L		United States		12,400		15,617,304

							68,147,104


FI-10		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)


		Country		Shares			Value
	Convertible Preferred Stocks (continued)
	Utilities 0.6%
	NextEra Energy Inc., 6.371%, cvt. pfd		United States		500,000		$	37,162,500


	Total Convertible Preferred Stocks (Cost $97,872,788)							105,309,604


				Units
f	Index-Linked Notes (Cost $14,054,540) 0.3%
	Financials 0.3%
e,g	Morgan Stanley Finance LLC, senior note, 144A, 5.62%, 10/03/19		United States		106,000			14,320,600


				Principal Amount*
	Convertible Bonds 1.1%
	Energy 0.6%
	Chesapeake Energy Corp., cvt., senior note, 5.50%, 9/15/26		United States		10,000,000			10,190,800
	Weatherford International Ltd., cvt., senior note, 5.875%, 7/01/21		United States		22,000,000			21,705,860

								31,896,660

	Health Care 0.5%
e	Bayer Capital Corp BV, cvt., junior sub. note, 144A, 5.625%, 11/22/19		Germany		25,000,000	EUR		31,196,698


	Total Convertible Bonds (Cost $58,017,168)							63,093,358

	Corporate Bonds 36.1%
	Consumer Discretionary 4.3%
e	24 Hour Holdings III LLC, senior note, 144A, 8.00%, 6/01/22		United States		6,300,000			6,285,006
	AMC Entertainment Holdings Inc., senior sub. note, 5.875%, 11/15/26		United States		10,000,000			9,650,000
	CCO Holdings LLC/CCO Holdings Capital Corp.,
	senior bond, 5.125%, 2/15/23		United States		10,000,000			9,921,900
	senior bond, 5.75%, 1/15/24		United States		9,000,000			9,045,000
	^e senior bond, 144A, 5.50%, 5/01/26		United States		10,000,000			9,722,000
	^esenior bond, 144A, 5.00%, 2/01/28		United States		5,000,000			4,600,000
	DISH DBS Corp.,
	senior bond, 5.875%, 7/15/22		United States		40,000,000			37,750,000
	senior bond, 5.00%, 3/15/23		United States		35,000,000			30,493,750
	senior note, 5.875%, 11/15/24		United States		9,400,000			7,990,000
	Fiat Chrysler Automobiles NV, senior note, 5.25%, 4/15/23		United Kingdom		9,300,000			9,385,560
	Ford Motor Co., senior note, 4.346%, 12/08/26		United States		4,300,000			4,211,180
	General Motors Co., senior bond, 5.15%, 4/01/38		United States		16,000,000			15,273,649
h	iHeartCommunications Inc., senior secured note, first lien, 9.00%, 12/15/19		United States		16,600,000			12,657,500
	KB Home, senior bond, 7.50%, 9/15/22		United States		3,400,000			3,683,186
e	Shea Homes LP/Shea Homes Funding Corp.,
	senior bond, 144A, 6.125%, 4/01/25		United States		8,000,000			8,000,000
	senior note, 144A, 5.875%, 4/01/23		United States		5,000,000			5,031,250
e	Sirius XM Radio Inc., senior bond, 144A, 6.00%, 7/15/24		United States		7,500,000			7,659,375
e,i	Tesla Inc., senior note, 144A, 5.30%, 8/15/25		United States		10,000,000			8,937,500
e	Univision Communications Inc.,
	senior secured note, first lien, 144A, 5.125%, 5/15/23		United States		15,000,000			14,437,500
	senior secured note, first lien, 144A, 5.125%, 2/15/25		United States		7,140,000			6,613,425


		Semiannual Report		FI-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)


		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Consumer Discretionary (continued)
e	Virgin Media Secured Finance PLC, senior secured bond, first lien, 144A, 5.50%, 1/15/25		United Kingdom		7,000,000	$	6,825,000
e	Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp.,
	senior bond, 144A, 5.50%, 3/01/25		United States		13,200,000		13,002,000
	senior bond, 144A, 5.25%, 5/15/27		United States		9,200,000		8,613,500

							249,788,281

	Consumer Staples 0.7%
e	BAT Capital Corp., senior note, 144A, 3.557%, 8/15/27		United Kingdom		20,000,000		18,647,700
e	JBS USA LLC/Finance Inc., senior note, 144A, 7.25%, 6/01/21		United States		10,900,000		11,063,500
	Kraft Heinz Foods Co., senior bond, 4.625%, 1/30/29.		United States		13,000,000		12,880,793

							42,591,993

	Energy 7.6%
e	Ascent Resources Utica Holdings LLC/ARU Finance Corp., senior note, 144A, 10.00%, 4/01/22		United States		25,000,000		27,625,000
	Bill Barrett Corp.,
	senior bond, 7.00%, 10/15/22		United States		17,937,000		18,026,685
	senior note, 8.75%, 6/15/25		United States		23,400,000		25,155,000
	Calumet Specialty Products Partners LP/Calumet Finance Corp., senior note, 6.50%, 4/15/21		United States		30,000,000		30,000,000
	Chesapeake Energy Corp.,
	^e secured note, second lien, 144A, 8.00%, 12/15/22		United States		29,388,000		30,958,789
	senior bond, 6.125%, 2/15/21		United States		16,000,000		16,280,000
	ⁱ senior bond, 8.00%, 6/15/27		United States		26,000,000		26,520,000
	senior note, 5.375%, 6/15/21		United States		12,875,000		12,681,875
	senior note, 4.875%, 4/15/22		United States		5,000,000		4,825,000
	senior note, 5.75%, 3/15/23		United States		5,000,000		4,750,000
	ⁱ senior note, 8.00%, 1/15/25		United States		31,500,000		32,159,925
	^j senior note, FRN, 5.598%, (3-month USD LIBOR + 3.25%), 4/15/19		United States		9,800,000		9,800,000
	Ferrellgas LP/Ferrellgas Finance Corp.,
	senior note, 6.50%, 5/01/21		United States		9,500,000		8,763,750
	senior note, 6.75%, 6/15/23		United States		5,000,000		4,387,500
	Kinder Morgan Inc.,
	senior bond, 7.75%, 1/15/32		United States		22,000,000		26,875,071
	^e senior secured bond, first lien, 144A, 5.625%, 11/15/23		United States		6,400,000		6,814,836
	Sanchez Energy Corp., senior note, 7.75%, 6/15/21		United States		27,000,000		23,152,500
e	Talos Production LLC/Talos Production Finance Inc., senior note, second lien, 144A, 11.00%, 4/03/22		United States		6,452,837		6,791,611
e,k	W&T Offshore Inc.,
	secured note, second lien, 144A, PIK, 9.00%, 5/15/20		United States		11,249,933		11,278,058
	senior secured note, third lien, 144A, PIK, 10.00%, 6/15/21		United States		10,192,610		9,678,327
	Weatherford International Ltd.,
	senior note, 5.125%, 9/15/20		United States		17,500,000		17,675,000
	senior note, 7.75%, 6/15/21		United States		31,000,000		32,007,500
	senior note, 4.50%, 4/15/22		United States		11,900,000		10,982,272
	senior note, 8.25%, 6/15/23		United States		37,500,000		37,297,125

							434,485,824


FI-12		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)


		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Financials 4.0%
	Bank of America Corp.,
	^l junior sub. bond, AA, 6.10% to 3/17/25, FRN thereafter, Perpetual		United States		8,000,000	$	8,325,200
	^l junior sub. bond, U, 5.20% to 6/01/23, FRN thereafter, Perpetual		United States		5,300,000		5,233,750
	^l junior sub. bond, X, 6.25% to 9/05/24, FRN thereafter, Perpetual		United States		6,000,000		6,277,500
	senior bond, 3.419% to 12/20/27, FRN thereafter, 12/20/28		United States		18,500,000		17,434,803
	Capital One Financial Corp., senior sub. note, 4.20%, 10/29/25		United States		15,500,000		15,071,761
	Citigroup Inc.,
	^l junior sub. bond, 5.35% to 5/15/23, FRN thereafter, Perpetual		United States		10,000,000		9,887,000
	^ljunior sub. bond, 5.90% to 2/15/23, FRN thereafter, Perpetual		United States		12,500,000		12,750,000
	^l junior sub. bond, 5.95% to 1/30/23, FRN thereafter, Perpetual		United States		4,500,000		4,584,375
	^l junior sub. bond, M, 6.30% to 5/15/24, FRN thereafter, Perpetual		United States		15,800,000		16,055,328
	^l junior sub. bond, O, 5.875% to 3/27/20, FRN thereafter, Perpetual		United States		25,000,000		25,640,000
	^l junior sub. bond, Q, 5.95% to 8/15/20, FRN thereafter, Perpetual		United States		10,000,000		10,318,750
	sub. bond, 4.125%, 7/25/28		United States		18,500,000		17,726,013
^j	The Goldman Sachs Group Inc., senior note, FRN, 3.272%, (3-month USD LIBOR + 1.201%), 9/29/25		United States		15,500,000		14,737,486
^l	JPMorgan Chase & Co.,
	^j junior sub. bond, FRN, 5.829%, (3-month USD LIBOR + 3.47%), Perpetual		United States		40,000,000		40,432,000
	junior sub. bond, R, 6.00% to 8/01/23, FRN thereafter, Perpetual		United States		3,200,000		3,276,000
	junior sub. bond, V, 5.00% to 7/30/19, FRN thereafter, Perpetual		United States		10,000,000		10,062,500
l	Morgan Stanley, junior sub. bond, 5.55% to 7/15/20, FRN thereafter, Perpetual		United States		7,300,000		7,533,235
l	Wells Fargo & Co., junior sub. bond, S, 5.90% to 6/15/24, FRN thereafter, Perpetual		United States		6,600,000		6,630,030

							231,975,731

	Health Care 11.2%
	Allergan Funding SCS, senior bond, 3.80%, 3/15/25		United States		17,000,000		16,527,045
e	Bausch Health Cos. Inc.,
	senior bond, 144A, 6.125%, 4/15/25		United States		9,400,000		8,695,000
	senior note, 144A, 5.875%, 5/15/23		United States		12,500,000		11,789,062
	senior note, 144A, 9.00%, 12/15/25		United States		5,000,000		5,206,250
	senior note, first lien, 144A, 7.00%, 3/15/24		United States		4,500,000		4,723,605
	senior secured note, first lien, 144A, 6.50%, 3/15/22		United States		3,000,000		3,116,250
	senior secured note, first lien, 144A, 5.50%, 11/01/25		United States		35,000,000		34,623,750
e	Bayer US Finance II LLC, senior note, 144A, 4.25%, 12/15/25		Germany		15,000,000		15,106,050
	CHS/Community Health Systems Inc.,
	senior note, 6.875%, 2/01/22		United States		104,415,000		53,773,725
	^e senior note, 144A, 11.00%, 6/30/23		United States		104,896,000		94,799,760
	^esenior note, 144A, 8.125%, 6/30/24		United States		46,688,000		38,809,400
	senior secured note, 5.125%, 8/01/21		United States		2,000,000		1,860,000
	senior secured note, first lien, 6.25%, 3/31/23		United States		39,000,000		35,880,000
	CVS Health Corp.,
	senior bond, 4.30%, 3/25/28		United States		8,000,000		7,903,682
	senior bond, 5.05%, 3/25/48		United States		3,900,000		3,954,064
	senior note, 4.10%, 3/25/25		United States		5,100,000		5,079,446
	DaVita Inc.,
	senior bond, 5.125%, 7/15/24		United States		5,000,000		4,859,375
	senior bond, 5.00%, 5/01/25		United States		4,000,000		3,775,000
e	Endo DAC/Endo Finance LLC/Endo Finco Inc.,
	senior bond, 144A, 6.00%, 2/01/25		United States		10,000,000		7,850,000
	senior note, 144A, 6.00%, 7/15/23		United States		15,000,000		12,412,500


		Semiannual Report		FI-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)


		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Health Care (continued)
e	Endo Finance LLC, senior note, 144A, 5.75%, 1/15/22		United States		22,500,000	$	20,250,000
	HCA Inc.,
	senior bond, 5.875%, 5/01/23		United States		7,500,000		7,800,000
	senior note, 7.50%, 2/15/22		United States		25,000,000		27,250,000
	senior secured note, first lien, 5.00%, 3/15/24		United States		10,400,000		10,426,000
	Horizon Pharma Inc., senior note, 6.625%, 5/01/23		United States		9,000,000		9,101,250
i	Mallinckrodt International Finance SA, senior bond, 4.75%, 4/15/23		United States		5,000,000		4,212,500
e	Mallinckrodt International Finance SA/Mallinckrodt CB LLC,
	senior note, 144A, 4.875%, 4/15/20		United States		20,200,000		19,947,500
	senior note, 144A, 5.75%, 8/01/22		United States		27,000,000		24,435,000
	senior note, 144A, 5.625%, 10/15/23		United States		14,300,000		11,990,550
	senior note, 144A, 5.50%, 4/15/25		United States		10,000,000		8,050,000
	Mylan NV, senior note, 3.95%, 6/15/26		United States		13,600,000		13,027,032
	Tenet Healthcare Corp.,
	^e secured note, second lien, 144A, 5.125%, 5/01/25		United States		2,500,000		2,385,937
	senior note, 8.125%, 4/01/22		United States		52,600,000		55,098,500
	senior note, 6.75%, 6/15/23		United States		58,200,000		58,127,250

							642,845,483

	Industrials 0.9%
e,k	CEVA Group PLC, senior secured note, first lien, 144A, PIK, 9.00%, 9/01/20		United Kingdom		13,428,791		13,914,317
e	Cloud Crane LLC, secured note, second lien, 144A, 10.125%, 8/01/24		United States		4,400,000		4,741,000
	United Rentals North America Inc., senior bond, 5.75%, 11/15/24		United States		1,800,000		1,836,000
e	West Corp., senior note, 144A, 8.50%, 10/15/25		United States		11,000,000		10,092,500
e	XPO Logistics Inc., senior note, 144A, 6.50%, 6/15/22		United States		19,580,000		20,142,925

							50,726,742

	Information Technology 1.6%
e	CommScope Inc., senior bond, 144A, 5.50%, 6/15/24		United States		10,000,000		10,087,500
e	Dell International LLC/EMC Corp.,
	senior secured note, first lien, 144A, 4.42%, 6/15/21		United States		12,500,000		12,685,881
	senior secured note, first lien, 144A, 5.45%, 6/15/23		United States		21,100,000		22,090,281
e	First Data Corp.,
	secured note, second lien, 144A, 5.75%, 1/15/24		United States		5,000,000		5,015,500
	senior note, 144A, 7.00%, 12/01/23.		United States		25,000,000		26,102,000
	NCR Corp.,
	senior note, 5.00%, 7/15/22		United States		5,500,000		5,472,500
	senior note, 6.375%, 12/15/23		United States		7,000,000		7,271,250

							88,724,912

	Materials 0.9%
e	BWAY Holding Co.,
	secured note, 144A, 5.50%, 4/15/24		United States		10,000,000		9,775,000
	senior note, 144A, 7.25%, 4/15/25.		United States		23,000,000		22,482,500
e	Cemex Finance LLC, senior secured note, first lien, 144A, 6.00%, 4/01/24		Mexico		14,700,000		14,946,886
e	FMG Resources (August 2006) Pty. Ltd., senior note, 144A, 5.125%, 5/15/24		Australia		6,700,000		6,534,577

							53,738,963

	Real Estate 0.6%
	Equinix Inc., senior bond, 5.375%, 5/15/27		United States		16,500,000		16,500,000
	Iron Mountain Inc., senior sub. bond, 5.75%, 8/15/24		United States		18,000,000		17,775,000

							34,275,000


FI-14		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)


		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Telecommunication Services 2.8%
	AT&T Inc., senior bond, 4.125%, 2/17/26		United States		12,000,000	$	11,748,615
e	SFR Group SA, senior note, first lien, 144A, 6.00%, 5/15/22		France		15,000,000		15,112,500
	Sprint Capital Corp., senior note, 6.90%, 5/01/19		United States		13,500,000		13,806,450
	Sprint Communications Inc.,
	senior bond, 11.50%, 11/15/21		United States		30,000,000		35,550,000
	senior note, 7.00%, 8/15/20		United States		7,500,000		7,781,250
	senior note, 6.00%, 11/15/22		United States		6,300,000		6,260,625
	Sprint Corp.,
	senior bond, 7.875%, 9/15/23		United States		37,500,000		38,976,563
	senior bond, 7.125%, 6/15/24		United States		8,200,000		8,299,138
	senior note, 7.625%, 3/01/26		United States		8,000,000		8,170,000
e	Sprint Spectrum Co. LLC, senior secured bond, first lien, 144A, 5.152%, 9/20/29		United States		16,000,000		15,700,000

							161,405,141

	Utilities 1.5%
	Calpine Corp.,
	senior bond, 5.75%, 1/15/25		United States		17,000,000		15,586,875
	senior note, 5.375%, 1/15/23		United States		20,000,000		19,100,000
	senior note, 5.50%, 2/01/24		United States		16,375,000		15,105,937
e	InterGen NV, secured bond, 144A, 7.00%, 6/30/23		Netherlands		6,400,000		6,368,000
	Vistra Energy Corp.,
	senior note, 7.375%, 11/01/22		United States		20,000,000		20,950,000
	senior note, 5.875%, 6/01/23		United States		8,000,000		8,270,000

							85,380,812


	Total Corporate Bonds (Cost $2,073,326,759)						2,075,938,882

j,m	Senior Floating Rate Interests 4.7%
	Consumer Discretionary 2.3%
	24 Hour Fitness Worldwide Inc., Term Loan, 5.594%, (1-month USD LIBOR + 3.50%), 3/31/25		United States		14,000,000		13,982,500
	Academy Ltd., Initial Term Loan, 6.001% - 6.092%, (1-month USD LIBOR + 4.00%), 7/02/22		United States		1,571,092		1,313,826
	Belk Inc., Closing Date Term Loan, 7.087%, (3-month USD LIBOR + 4.75%), 12/12/22		United States		24,404,557		18,950,139
	BJ’s Wholesale Club Inc.,
	ⁿ Second Lien Initial Term Loans, TBD, 3/24/25		United States		5,974,520		6,046,214
	Tranche B Term Loans, 5.53%, (1-month USD LIBOR + 3.50%), 3/27/24		United States		10,826,489		10,838,669
h	iHeartCommunications Inc.,
	Tranche D Term Loan, 8.443%, (3-month USD LIBOR + 6.75%), 1/30/19		United States		45,864,664		35,103,667
	Tranche E Term Loan, 9.193%, (3-month USD LIBOR + 7.50%), 7/30/19		United States		13,142,769		10,055,729
	PetSmart Inc., Tranche B-2 Loans, 5.01%, (1-month USD LIBOR + 3.00%), 3/11/22		United States		18,500,000		15,340,848
n	Stars Group Holdings BV Stars Group (US), Term Loan B, TBD, 7/10/25		United States		20,000,000		19,900,000

							131,531,592

	Consumer Staples 0.3%
	Almonde Inc., Dollar Term Loan, 5.807%, (3-month USD LIBOR + 3.50%), 6/13/24		United States		14,887,500		14,647,439

	Energy 0.2%
	W&T Offshore Inc., Second Lien Term Loan, 9.00%, 5/15/20		United States		11,000,000		11,041,250


		Semiannual Report		FI-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)


		Country		Principal Amount*		Value
j,m	Senior Floating Rate Interests (continued)
	Health Care 0.4%
	Amneal Pharmaceuticals LLC, Initial Term Loans, 5.625%, (1-month USD LIBOR + 3.50%), 5/04/25		United States		24,994,222	$	24,986,474

	Industrials 0.8%
	CEVA Group PLC, Pre-Funded L/C, 6.50%, (3-month USD LIBOR + 5.50%), 3/19/21		United Kingdom		4,069,545		4,068,447
	CEVA Intercompany BV, Dutch BV Term Loan, 7.859%, (3-month USD LIBOR + 5.50%), 3/19/21		United Kingdom		1,657,455		1,657,007
	CEVA Logistics Canada ULC, Canadian Term Loan, 7.859%, (3-month USD LIBOR + 5.50%), 3/19/21		Canada		847,085		846,856
	CEVA Logistics U.S. Holdings Inc., U.S. Term Loan, 7.859%, (3-month USD LIBOR + 5.50%), 3/19/21		United Kingdom		6,776,678		6,774,848
	Commercial Barge Line Co., Initial Term Loan, 10.844%, (1-month USD LIBOR + 8.75%), 11/12/20		United States		8,875,000		6,213,876
	Vertiv Group Corp., Term B Loans, 6.001%, (1-month USD LIBOR + 4.00%), 11/30/23		United States		8,574,569		8,494,182
	West Corp., Term B Loans, 6.094%, (1-month USD LIBOR + 4.00%), 10/10/24		United States		17,549,481		17,513,434

							45,568,650

	Information Technology 0.2%
	MH Sub I LLC & Micro Holding Corp.,
	Amendment No. 2 Initial Term Loan, 5.835%, (1-month USD LIBOR + 3.75%), 9/15/24		United States		8,942,450		8,951,795
	Second Lien Initial Term Loan, 9.585%, (1-month USD LIBOR + 7.50%), 9/15/25		United States		5,000,000		5,037,500

							13,989,295

	Telecommunication Services 0.3%
	Securus Technologies Holdings Inc.,
	^n,o Delayed Draw Term Loan, TBD, 11/01/24.		United States		8,800,000		8,729,600
	^o Initial Term Loan B, 6.594%, (1-month USD LIBOR + 4.50%), 11/01/24		United States		2,194,486		2,213,231
	Second Lien Initial Loan, 10.344%, (1-month USD LIBOR + 8.25%), 11/01/25		United States		6,000,000		6,043,128

							16,985,959

	Utilities 0.2%
	Talen Energy Supply LLC,
	Initial Term Loan, 6.094%, (1-month USD LIBOR + 4.00%), 4/13/24		United States		7,876,000		7,912,096
	Term B-1 Loans, 6.094%, (1-month USD LIBOR + 4.00%), 7/15/23		United States		5,925,000		5,960,550

							13,872,646


	Total Senior Floating Rate Interests (Cost $288,024,815)						272,623,305

	U.S. Government and Agency Securities 6.5%
	U.S. Treasury Note,
	1.00%, 6/30/19		United States		50,000,000		49,336,914
	2.25%, 3/31/20		United States		50,000,000		49,777,344
	2.50%, 5/31/20		United States		75,000,000		74,969,238
	2.50%, 6/30/20		United States		50,000,000		49,973,633
	2.375%, 3/15/21		United States		50,000,000		49,698,242
	2.75%, 4/30/23		United States		25,000,000		25,019,531
	2.75%, 5/31/23		United States		50,000,000		50,050,781


FI-16		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)


		Country		Principal Amount*		Value
	U.S. Government and Agency Securities (continued)
	U.S. Treasury Note, (continued)
	2.875%, 5/31/25		United States		25,000,000	$	25,094,239


	Total U.S. Government and Agency Securities (Cost $373,807,576)						373,919,922


				Shares
	Escrows and Litigation Trusts (Cost $62,603) 0.0%
b,c	Motors Liquidation Co., Escrow Account, cvt. pfd., C		United States		1,400,000		—


	Total Investments before Short Term Investments (Cost $5,219,227,999)						5,539,413,107

	Short Term Investments 4.7%
	Money Market Funds (Cost $266,334,565) 4.6%
p,q	Institutional Fiduciary Trust Money Market Portfolio, 1.51%		United States		266,334,565		266,334,565

r	Investments from Cash Collateral Received for Loaned Securities 0.1%
	Money Market Funds (Cost $3,083,000) 0.1%
p,q	Institutional Fiduciary Trust Money Market Portfolio, 1.51%		United States		3,083,000		3,083,000


				Principal Amount*
	Repurchase Agreement (Cost $667,177) 0.0%†
s	Joint Repurchase Agreement, 2.10%, 7/02/18 (Maturity Value $667,294)
	J.P. Morgan Securities LLC
	Collateralized by U.S. Treasury Bond, Index Linked, 0.125%, 7/15/22; and U.S. Treasury Note, Index Linked, 0.125% - 1.875%, 7/15/19 - 1/15/22 (valued at $680,522)		United States		667,177		667,177


	Total Investments from Cash Collateral Received for Loaned Securities (Cost $3,750,177)						3,750,177


	Total Investments (Cost $5,489,312,741) 101.0%						5,809,497,849
	Options Written (0.0)%†						(1,315,000	)
	Other Assets, less Liabilities (1.0)%						(54,062,172	)

	Net Assets 100.0%					$	5,754,120,677


		Number of Contracts		Notional Amount*
t	Options Written (0.0)%†
	Calls - Exchange-Traded
	Anadarko Petroleum Corp., August Strike Price $75, Expires 8/17/18		4,000		400,000		(1,140,000	)
	Medtronic PLC, August Strike Price $90, Expires 8/17/18		3,500		350,000		(175,000	)


	Total Options Written (Premiums received $921,113)					$	(1,315,000	)


		Semiannual Report		FI-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

See Abbreviations on page FI-31.

^†Rounds to less than 0.1% of net assets.

^*The principal/notional amount is stated in U.S. dollars unless otherwise indicated.

^aA portion or all of the security is held in connection with written option contracts open at period end.

^bNon-income producing.

^cFair valued using significant unobservable inputs. See Note 10 regarding fair value measurements.

^dSee Note 1(g) regarding equity-linked securities.

^eSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2018, the aggregate value of these securities was $1,201,590,776, representing 20.7% of net assets.

^fSee Note 1(f) regarding index-linked notes.

^gSecurity pays a fixed 2.00% coupon rate and a variable coupon based on the distribution of the Morgan Stanley Custom Enhanced SPX B DT Index 20 Delta. The coupon rate shown represents the combined rate at period end. Cash payment at maturity or upon early redemption is based on the performance of the Morgan Stanley Custom Enhanced SPX B Index 20 Delta.

^hSee Note 7 regarding defaulted securities.

ⁱA portion or all of the security is on loan at June 30, 2018. See Note 1(h).

^jThe coupon rate shown represents the rate at period end.

^kIncome may be received in additional securities and/or cash.

^lPerpetual security with no stated maturity date.

^mSee Note 1(i) regarding senior floating rate interests.

ⁿA portion or all of the security represents an unsettled loan commitment. The coupon rate is to-be determined (TBD) at the time of settlement and will be based upon a reference index/floor plus a spread.

^oA portion or all of the security purchased on a delayed delivery basis. See Note 1(d).

^pSee Note 3(e) regarding investments in affiliated management investment companies.

^qThe rate shown is the annualized seven-day effective yield at period end.

^rSee Note 1(h) regarding securities on loan.

^sSee Note 1(c) regarding repurchase agreement.

^tSee Note 1(e) regarding written options.


FI-18		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2018 (unaudited)


	Franklin Income VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	5,219,227,999
Cost - Non-controlled affiliates (Note 3e)		269,417,565
Cost - Unaffiliated repurchase agreements		667,177

Value - Unaffiliated issuers ⁺	$	5,539,413,107
Value - Non-controlled affiliates (Note 3e)		269,417,565
Value - Unaffiliated repurchase agreements		667,177
Cash		931,334
Receivables:
Investment securities sold		9,605,399
Capital shares sold		499,499
Dividends and interest		39,937,486
Other assets		3,971

Total assets		5,860,475,538

Liabilities:
Payables:
Investment securities purchased		92,138,885
Capital shares redeemed		4,453,848
Management fees		2,063,817
Distribution fees		2,188,293
Options written, at value (premiums received $921,113)		1,315,000
Payable upon return of securities loaned		3,750,177
Accrued expenses and other liabilities		444,841

Total liabilities		106,354,861

Net assets, at value	$	5,754,120,677

Net assets consist of:
Paid-in capital	$	5,273,711,114
Undistributed net investment income		116,130,050
Net unrealized appreciation (depreciation)		319,712,384
Accumulated net realized gain (loss)		44,567,129

Net assets, at value	$	5,754,120,677


Class 1:
Net assets, at value	$	695,523,134

Shares outstanding		43,335,394

Net asset value and maximum offering price per share	$	16.05


Class 2:
Net assets, at value	$	4,732,266,474

Shares outstanding		304,926,392

Net asset value and maximum offering price per share	$	15.52


Class 4:
Net assets, at value	$	326,331,069

Shares outstanding		20,533,306

Net asset value and maximum offering price per share	$	15.89

⁺Includes securities loaned	$	3,626,882


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report		FI-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2018 (unaudited)


	Franklin Income VIP Fund
Investment income:
Dividends: (net of foreign taxes)*
Unaffiliated issuers	$	53,873,761
Non-controlled affiliates (Note 3e)		1,833,368
Interest:
Unaffiliated issuers		87,473,555
Income from securities loaned (net of fees and rebates)		42,790

Total investment income		143,223,474

Expenses:
Management fees (Note 3a)		13,311,547
Distribution fees: (Note 3c)
Class 2		6,028,792
Class 4		568,957
Custodian fees (Note 4)		33,600
Reports to shareholders		224,618
Professional fees		119,432
Trustees’ fees and expenses		15,351
Other		58,818

Total expenses		20,361,115
Expense reductions (Note 4)		(21,306	)
Expenses waived/paid by affiliates (Note 3e)		(543,023	)

Net expenses		19,796,786

Net investment income		123,426,688

Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		276,372,576
Written options		2,929,564
Realized gain distributions from REITs		139,700
Foreign currency transactions		(260,875	)

Net realized gain (loss)		279,180,965

Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(360,466,813	)
Translation of other assets and liabilities denominated in foreign currencies		(120,478	)
Written options		182,007

Net change in unrealized appreciation (depreciation)		(360,405,284	)

Net realized and unrealized gain (loss)		(81,224,319	)

Net increase (decrease) in net assets resulting from operations	$	42,202,369

*Foreign taxes withheld on dividends	$	1,913,416


FI-20		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets


	Franklin Income VIP Fund
	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	123,426,688		$	246,080,825
Net realized gain (loss)		279,180,965			161,381,487
Net change in unrealized appreciation (depreciation)		(360,405,284	)		162,933,235

Net increase (decrease) in net assets resulting from operations		42,202,369			570,395,547

Distributions to shareholders from:
Net investment income:
Class 1		(34,377,723	)		(30,736,550	)
Class 2		(227,495,537	)		(212,433,443	)
Class 4		(14,948,805	)		(12,598,021	)

Total distributions to shareholders		(276,822,065	)		(255,768,014	)

Capital share transactions: (Note 2)
Class 1		(11,252,125	)		1,111,670
Class 2		(115,690,591	)		(307,051,941	)
Class 4		3,819,375			8,458,865

Total capital share transactions		(123,123,341	)		(297,481,406	)

Net increase (decrease) in net assets		(357,743,037	)		17,146,127
Net assets:
Beginning of period		6,111,863,714			6,094,717,587

End of period	$	5,754,120,677		$	6,111,863,714

Undistributed net investment income included in net assets:
End of period	$	116,130,050		$	269,525,427


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FI-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Income VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eighteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Income VIP Fund (Fund) is included in this report. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers three classes of shares: Class 1, Class 2 and Class 4. Each class of shares may differ by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities and derivative financial instruments listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded, or as of 4 p.m. Eastern time. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the day that the value of the security is determined. Over-the-counter

(OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.

Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the date that the values of the foreign debt securities are determined.

Investments in open-end mutual funds are valued at the closing NAV. Investments in repurchase agreements are valued at cost, which approximates fair value.


	FI-22			Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

b. Foreign Currency Translation

decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

c. Joint Repurchase Agreement


		Semiannual Report			FI-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

c. Joint Repurchase Agreement (continued)

default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls below the repurchase price owed by the seller. The joint repurchase agreement held by the Fund at period end, as indicated in the Statement of Investments, had been entered into on June 29, 2018.

d. Securities Purchased on a Delayed Delivery Basis

The Fund purchases securities on a delayed delivery basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of holding the securities, it may sell the securities before the settlement date. Sufficient assets have been segregated for these securities.

e. Derivative Financial Instruments

The Fund invested in derivative financial instruments in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown in the Statement of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statement of Operations.

The Fund purchased or wrote exchange traded option contracts primarily to gain exposure to equity price risk. An option is a contract entitling the holder to purchase or sell a specific

amount of shares or units of an asset or notional amount of a swap (swaption), at a specified price. When an option is purchased or written, an amount equal to the premium paid or received is recorded as an asset or liability, respectively. Upon exercise of an option, the acquisition cost or sales proceeds of the underlying investment is adjusted by any premium received or paid. Upon expiration of an option, any premium received or paid is recorded as a realized gain or loss. Upon closing an option other than through expiration or exercise, the difference between the premium received or paid and the cost to close the position is recorded as a realized gain or loss.

See Note 8 regarding other derivative information.

f. Index-Linked Notes

The Fund invests in index-linked notes. Index-linked notes are senior, unsecured, subordinated debt securities issued by a financial institution, and the value is based on the price movements of the underlying index. Index-linked notes are designed to provide investors access to the returns of various market benchmarks and intended to replicate the economic effects that would apply had the Fund directly purchased the underlying referenced asset or basket of assets. The risks of investing in index-linked notes include unfavorable price movements in the underlying index and the credit risk of the issuing financial institution. There may be no guarantee of a return of principal with index-linked notes and the appreciation potential may be limited. Index-linked notes may be more volatile and less liquid than other investments held by the Fund.

g. Equity-Linked Securities


	FI-24			Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

h. Securities Lending

The Fund participates in an agency based securities lending program to earn additional income. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of Fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Fund, and/or a joint repurchase agreement. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned, net of fees paid to the securities lending agent and/or third-party vendor, is reported separately in the Statement of Operations. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower.

i. Senior Floating Rate Interests

The Fund invests in senior secured corporate loans that pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. These base lending rates are generally the prime rate offered by a designated U.S. bank or the London InterBank Offered Rate (LIBOR). Senior secured corporate loans often require prepayment of principal from excess cash flows or at the discretion of the borrower. As a result, actual maturity may be substantially less than the stated maturity. Senior secured corporate loans in which the Fund invests are generally readily marketable, but may be subject to certain restrictions on resale.

j. Income and Deferred Taxes

As a result of several court cases, in certain countries across the European Union, the Fund filed additional tax reclaims for previously withheld taxes on dividends earned in those countries (EU reclaims). These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. Income recognized, if any, for EU reclaims is reflected as other income in the Statement of Operations and any related receivable, if any, is reflected as European Union tax reclaims in the Statement of Assets and Liabilities. When uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these EU reclaims, and the potential timing of payment, no amounts are reflected in the financial statements. For U.S. income tax purposes, when EU reclaims are received by the Fund and the Fund previously passed foreign tax credit on to its shareholders, the Fund must either amend historic tax reporting to shareholders or enter into a closing agreement with the Internal Revenue Service (IRS) in order to pay the associated tax liability on behalf of the Fund’s shareholders.

k. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated


		Semiannual Report		FI-25

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

k. Security Transactions, Investment Income, Expenses and Distributions (continued)

expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Facility fees are recognized as income over the expected term of the loan. Dividend income is recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

l. Accounting Estimates

m. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

2. Shares of Beneficial Interest

At June 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 1 Shares:
Shares sold		927,947		$	15,454,080			2,556,049		$	41,649,315
Shares issued in reinvestment of distributions		2,128,651			34,377,723			1,925,849			30,736,550
Shares redeemed		(3,694,865	)		(61,083,928	)		(4,368,760	)		(71,274,195	)

Net increase (decrease)		(638,267	)	$	(11,252,125	)		113,138		$	1,111,670

Class 2 Shares:
Shares sold		7,178,138		$	115,490,704			12,063,249		$	190,265,472
Shares issued in reinvestment of distributions		14,573,705			227,495,537			13,740,843			212,433,443
Shares redeemed		(28,622,492	)		(458,676,832	)		(44,928,166	)		(709,750,856	)

Net increase (decrease)		(6,870,649	)	$	(115,690,591	)		(19,124,074	)	$	(307,051,941	)


FI-26		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 4 Shares:
Shares sold		1,838,568		$	30,247,769			3,354,488		$	54,048,239
Shares issued in reinvestment of distributions		934,885			14,948,805			796,839			12,598,021
Shares redeemed		(2,514,552	)		(41,377,199	)		(3,605,896	)		(58,187,395	)

Net increase (decrease)		258,901		$	3,819,375			545,431		$	8,458,865

3. Transactions with Affiliates


Subsidiary		Affiliation
Franklin Advisers, Inc. (Advisers)		Investment manager
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent

a. Management Fees

The Fund pays an investment management fee to Advisers based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
0.625%		Up to and including $100 million
0.500%		Over $100 million, up to and including $250 million
0.450%		Over $250 million, up to and including $7.5 billion
0.440%		Over $7.5 billion, up to and including $10 billion
0.430%		Over $10 billion, up to and including $12.5 billion
0.420%		Over $12.5 billion, up to and including $15 billion
0.400%		In excess of $15 billion

For the period ended June 30, 2018, the annualized gross effective investment management fee rate was 0.454% of the Fund’s average daily net assets.

b. Administrative Fees

c. Distribution Fees


		Semiannual Report		FI-27

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

3. Transactions with Affiliates (continued)

d. Transfer Agent Fees

Investor Services, under terms of an agreement, performs shareholder servicing for the Fund and is not paid by the Fund for the services.

e. Investments in Affiliated Management Investment Companies

The Fund invests in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the affiliated management investment companies, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. During the period ended June 30, 2018, the Fund held investments in affiliated management investment companies as follows:


	Number of Shares Held at Beginning of Period	Gross Additions		Gross Reductions			Number of Shares Held at End of Period		Value at End of Period		Dividend Income		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 1.51%	352,824,455		1,257,337,756		(1,340,744,646	)		269,417,565	$	269,417,565	$	1,833,368	$	—	$	—

f. Other Affiliated Transactions

At June 30, 2018, Franklin Templeton Variable Insurance Products Trust — Franklin Founding Funds Allocation VIP Fund owned 5.2% of the Fund’s outstanding shares.

4. Expense Offset Arrangement

5. Income Taxes

At December 31, 2017, the Fund had capital loss carryforwards of $157,561,044 expiring in 2018 and short-term capital loss carryforwards of $72,609,502 not subject to expiration.

At June 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


Cost of investments	$	5,502,193,887

Unrealized appreciation	$	589,884,591
Unrealized depreciation		(283,895,629	)

Net unrealized appreciation (depreciation)	$	305,988,962

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of bond discounts and premiums and equity-linked securities.


FI-28		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2018, aggregated $1,846,237,811 and $1,904,720,533, respectively.

At June 30, 2018, in connection with securities lending transactions, the Fund loaned corporate bonds and received $3,750,177 of cash collateral. The gross amount of recognized liability for such transactions is included in payable upon return of securities loaned in the Statement of Assets and Liabilities. The agreements can be terminated at any time.

7. Credit Risk and Defaulted Securities

At June 30, 2018, the Fund had 35.7% of its portfolio invested in high yield, senior secured floating rate notes, or other securities rated below investment grade and unrated securities, if any. These securities may be more sensitive to economic conditions causing greater price volatility and are potentially subject to a greater risk of loss due to default than higher rated securities.

The Fund held defaulted securities and/or other securities for which the income has been deemed uncollectible. At June 30, 2018, the aggregate value of these securities was $57,816,896, representing 1.0% of the Fund’s net assets. The Fund discontinues accruing income on securities for which income has been deemed uncollectible and provides an estimate for losses on interest receivable. The securities have been identified in the accompanying Statement of Investments.

8. Other Derivative Information

At June 30, 2018, the Fund’s investments in derivative contracts are reflected in the Statement of Assets and Liabilities as follows:

Asset Derivatives

Liability Derivatives

Derivative Contracts
Not Accounted for
as Hedging Instruments

Statement of Assets and
Liabilities Location

Fair Value

Statement of Assets and
Liabilities Location

Fair Value

Equity contracts

Investments in securities, at value

—

Options written, at value

1,315,000

For the period ended June 30, 2018, the effect of derivative contracts in the Fund’s Statement of Operations was as follows:

Derivative Contracts
Not Accounted for
as Hedging Instruments

Statement of

Operations Location

Net Realized
Gain (Loss)
for the Period

Statement of

Operations Location

Net Change in
Unrealized
Appreciation
(Depreciation)
for the Period

Net realized gain (loss) from:

Net change in unrealized appreciation (depreciation) on:

Equity contracts

Investments

(1,532,000

)^a

Investments

1,147,000^a

Written options

2,929,564

Written options

182,007

Totals

1,397,564

1,329,007

^aPurchased option contracts are included in net realized gain (loss) from investments and net change in unrealized appreciation (depreciation) on investments in the Statement of Operations.

For the period ended June 30, 2018, the average month end notional amount of options represented $875,429.

See Note 1(e) regarding derivative financial instruments.


		Semiannual Report		FI-29

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

9. Credit Facility

10. Fair Value Measurements

•

Level 1 – quoted prices in active markets for identical financial instruments

•

Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

•

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2018, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:


	Level 1		Level 2		Level 3			Total
Assets:
Investments in Securities:^a
Equity Investments:^b
Financials	$	387,172,576	$	9,262,500	$	—		$	396,435,076
Industrials		139,655,000		—		6,378,320			146,033,320
All Other Equity Investments		1,803,541,524		—		—			1,803,541,524
Equity-Linked Securities		—		393,507,120		—			393,507,120
Index-Linked Notes		—		14,320,600		—			14,320,600
Convertible Bonds		—		63,093,358		—			63,093,358
Corporate Bonds		—		2,075,938,882		—			2,075,938,882
Senior Floating Rate Interests		—		272,623,305		—			272,623,305
U.S. Government and Agency Securities		—		373,919,922		—			373,919,922
Escrows and Litigation Trusts		—		—		—	^c		—
Short Term Investments		269,417,565		667,177		—			270,084,742

Total Investments in Securities	$	2,599,786,665	$	3,203,332,864	$	6,378,320		$	5,809,497,849


FI-30		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)


	Level 1		Level 2		Level 3		Total
Liabilities:
Other Financial Instruments:
Options Written	$	1,315,000	$	—	$	—	$	1,315,000

^aFor detailed categories, see the accompanying Statement of Investments.

^bIncludes common and convertible preferred stocks.

^cIncludes securities determined to have no value at June 30, 2018.

A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the beginning and/or end of the period.

11. New Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2017-08, Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in the ASU shorten the amortization period for certain callable debt securities acquired at a premium, to be amortized to the earliest call date. The ASU does not require an accounting change for securities acquired at a discount, which continues to be amortized to maturity. The ASU is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

12. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations


Currency		Selected Portfolio

EUR	Euro	ADR	American Depositary Receipt

USD	United States Dollar	FNMA	Federal National Mortgage Association

		FRN	Floating Rate Note

		L/C	Letter of Credit

		LIBOR	London InterBank Offered Rate

		PIK	Payment-In-Kind


		Semiannual Report		FI-31

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Franklin Large Cap Growth VIP Fund

We are pleased to bring you Franklin Large Cap Growth VIP Fund’s semiannual report for the period ended June 30, 2018.

Class 1 Performance Summary as of June 30, 2018

The Fund’s Class 1 Shares posted a +12.09% total return for the six-month period ended June 30, 2018.


		Semiannual Report			FLG-1

FRANKLIN LARGE CAP GROWTH VIP FUND

Fund Goal and Main Investments

The Fund seeks capital appreciation. Under normal market conditions, the Fund invests at least 80% of its net assets in investments of large capitalization companies. For this Fund, large capitalization companies are those with market capitalization values within those of the top 50% of companies in the Russell 1000^® Index at the time of purchase.¹

Fund Risks

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Fund’s benchmark, the Standard & Poor’s^® 500 Index (S&P 500^®), generated a +2.65% total return.²

Economic and Market Overview

Portfolio Composition

Based on Total Net Assets as of 6/30/18

LOGO

beginning of the six-month period, to 4.0% at period-end.³ Annual inflation, as measured by the Consumer Price Index, increased from 2.1% in December 2017, as reported at the beginning of the period, to 2.9% at period-end.³

1. Please see Index Descriptions following the Fund Summaries.

2. Source: Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

3. Source: US Bureau of Labor Statistics.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).


FLG-2		Semiannual Report

FRANKLIN LARGE CAP GROWTH VIP FUND

forecasts for 2018 and 2019. Furthermore, the Fed forecasted an additional rate hike for 2018 and 2019 than previously anticipated.

US equity markets rose overall during the period, benefiting from mostly upbeat economic data and better US corporate earnings. At certain points during the period, markets were also supported by the expectations of gradual rate increases. After reaching new all-time highs in January 2018, US stocks declined in February amid concerns that strong economic growth and rising inflation would lead the Fed to increase its target rate faster than expected. In March, markets were pressured further by a broad sell-off in information technology stocks due to a potential for tighter regulation in the sector arising from concerns about consumer data privacy. Other factors that curbed investor sentiment included tensions between the US and North Korea, political uncertainties in the US, the Trump administration’s protectionist policies and escalating trade tensions between the US and China. An overall easing of tensions in the Korean peninsula and intermittent US-China trade negotiations partially offset some of these concerns. However, US trade disputes with its allies and China near period-end dampened investor sentiment. In this environment, the broad US stock market, as measured by the S&P 500, generated a +2.65% total return for the period.²

Investment Strategy

We are a research driven, fundamental investor, pursuing a growth strategy. As a “bottom-up” investor focusing primarily on individual securities, we seek companies that have identifiable drivers of future earnings growth and that present, in our opinion, the best trade-off between that potential earnings growth, business and financial risk, and valuation.

Manager’s Discussion

Looking back on the key factors affecting the Fund’s returns during the six months under review, we would like to remind shareholders that our investment strategy is primarily bottom-up and driven by individual stock selection. However, we recognize that a sector-based discussion can be a helpful way to organize a portfolio review of key performance drivers. We employed our long-held strategy: bottom-up, individual company, fundamental research aimed at opportunistically finding what we believed to be outstanding large-cap companies across all sectors, at valuations we believed understated their fair worth, with future growth potential being a key driver of estimated worth.


Top 10 Holdings
6/30/18
Company Sector/Industry	% of Total Net Assets
Amazon.com Inc. Consumer Discretionary		8.2%
Apple Inc. Information Technology		5.1%
Mastercard Inc. Information Technology		5.1%
Visa Inc. Information Technology		4.5%
Facebook Inc. Information Technology		4.3%
Microsoft Corp. Information Technology		4.2%
Alphabet Inc. Information Technology		4.1%
UnitedHealth Group Inc. Health Care		2.5%
SBA Communications Corp. Real Estate		2.4%
ServiceNow Inc. Information Technology		2.4%

During the period, most sectors represented in the Fund’s portfolio contributed to absolute performance. Relative to the S&P 500, the information technology (IT) sector contributed significantly to performance due to an overweighted allocation and stock selection. Stock selection and an overweighted position in the consumer discretionary sector also aided relative results, as did stock selection and an underweighted allocation in financials.

In IT, payment technology company Mastercard contributed to relative performance. The company reported strong quarterly revenues that exceeded consensus expectations. In addition, it increased its 2018 revenue guidance and announced several growth initiatives. Other IT contributors included workflow platform company ServiceNow⁴ and diversified software firm Adobe Systems.

In the consumer discretionary sector, online retail shopping and cloud services provider Amazon.com helped relative results as it reported better-than-expected revenue and operating profits in the first quarter of 2018. Highlights included accelerating growth at its market-leading cloud business Amazon Web Services (AWS), as well as retail strength driven by advertising and its Prime service. Improved utilization in its fulfillment and

4. Not part of the index.


		Semiannual Report			FLG-3

FRANKLIN LARGE CAP GROWTH VIP FUND

data centers drove margins higher for the period, while the mix shift toward higher margin businesses continued to drive higher profitability over time. With e-commerce in its early days, we do not underestimate the growth and sustainability of Amazon.com, which continues to add new categories and countries to its footprint. The company also continues to see accelerated growth in AWS, which we consider a leader in Infrastructure-as-a-Service cloud computing.

In financials, diversified financial services company SVB Financial Group contributed to relative performance.

Elsewhere, medical devices manufacturer ABIOMED benefited relative results. The company has experienced strengthening sales, a trend we believe can continue. In addition, the company’s operating margins have improved, and it has benefited from US corporate tax reform. Commercial real estate information company CoStar Group⁴ also contributed to performance.

In contrast, an underweighting and stock selection in the energy sector detracted from the Fund’s results relative to the S&P 500, as did an overweighted position in the real estate sector. In real estate, data center operator Equinix was the sector’s largest detractor.

Elsewhere, biopharmaceuticals company Celgene hindered relative performance. The company’s application to the US Food and Drug Administration for Ozanimod, a new drug to treat multiple sclerosis and inflammatory bowel disease, was rejected during the period. In addition, concerns over patent expirations in coming years dampened investor sentiment. Machinery firm Stanley Black & Decker also detracted from relative results. The company reported revenues slightly above consensus expectations. However, its shares declined amid softer operating margins and guidance for future growth to come in below recent levels. Internet streaming service Netflix curbed relative performance due to the Fund’s underweighted position. The company’s shares performed well during the period amid solid quarterly results, with international subscriber trends that were particularly positive. Subscription gains came in ahead of estimates in the US and internationally, driven by a stronger-than-expected slate of content.

Thank you for your participation in Franklin Large Cap Growth VIP Fund. We look forward to serving your future investment needs.


FLG-4		Semiannual Report

FRANKLIN LARGE CAP GROWTH VIP FUND

Class 1 Fund Expenses

Actual Fund Expenses

The table below provides information about the actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of ongoing Fund expenses but does not include the effect of ongoing Contract expenses, is used to calculate the “Ending Account Value.” You can estimate the Fund-level expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number under the headings “Actual” and “Fund-Level Expenses Paid During Period” (if Fund-Level Expenses Paid During Period were $ 7.50, then 8.6 × $7.50 = $64.50). In this illustration, the estimated expenses paid this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Actual
(actual return after expenses)

Hypothetical
(5% annual return before expenses)

Share

Class

Beginning Account
Value 1/1/18

Ending Account

Value 6/30/18

Fund-Level
Expenses Paid
During Period
1/1/18–6/30/18

^1,2

Ending Account

Value 6/30/18

Fund-Level
Expenses Paid
During Period
1/1/18–6/30/18

^1,2

Net

Annualized

Expense

Ratio

Class 1

$1,000

$1,120.90

$4.36

$1,020.68

$4.16

0.83%

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above — in the far right column — multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include any ongoing expenses of the Contract for which the Fund is an investment option or acquired fund fees and expenses.


		Semiannual Report			FLG-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Large Cap Growth VIP Fund


	Six Months Ended June 30, 2018			Year Ended December 31,
	(unaudited)			2017			2016			2015			2014			2013
Class 1
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$20.93			$17.85			$18.42			$23.26			$20.91			$16.43


Income from investment operations^a:

Net investment income (loss)^b		(0.01	)		(0.03	)		(0.04	)		(0.06	)		0.11			0.24

Net realized and unrealized gains (losses)		2.59			4.91			(0.26	)		1.56			2.54			4.48

Total from investment operations		2.58			4.88			(0.30	)		1.50			2.65			4.72


Less distributions from:

Net investment income		—			(0.20	)		—			(0.13	)		(0.30	)		(0.24	)

Net realized gains		(1.73	)		(1.60	)		(0.27	)		(6.21	)		—			—

Total distributions		(1.73	)		(1.80	)		(0.27	)		(6.34	)		(0.30	)		(0.24	)

Net asset value, end of period		$21.78			$20.93			$17.85			$18.42			$23.26			$20.91


Total return^c		12.09%			28.38%			(1.49)%			5.89%			12.74%			28.92%

Ratios to average net assets^d

Expenses		0.83%	^e		0.87%	^e		0.80%	^e		0.78%			0.79%			0.79%

Net investment income (loss)		(0.11)%			(0.14)%			(0.19)%			(0.27)%			0.50%			1.27%

Supplemental data

Net assets, end of period (000’s)		$1,214			$1,092			$883			$47,864			$54,971			$54,291

Portfolio turnover rate		11.60%			24.96%			36.26%	^f		23.23%			93.53%			28.27%

^bBased on average daily shares outstanding.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fExcludes the value of portfolio securities delivered as a result of a redemption in-kind.


FLG-6		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Large Cap Growth VIP Fund (continued)


	Six Months Ended June 30, 2018			Year Ended December 31,
	(unaudited)			2017			2016			2015			2014			2013
Class 2
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$20.48			$17.48			$18.09			$22.94			$20.62			$16.20


Income from investment operations^a:

Net investment income (loss)^b		(0.04	)		(0.08	)		(0.08	)		(0.11	)		0.06			0.19

Net realized and unrealized gains (losses)		2.54			4.81			(0.26	)		1.54			2.50			4.42

Total from investment operations		2.50			4.73			(0.34	)		1.43			2.56			4.61


Less distributions from:

Net investment income		—			(0.13	)		—			(0.07	)		(0.24	)		(0.19	)

Net realized gains		(1.73	)		(1.60	)		(0.27	)		(6.21	)		—			—

Total distributions		(1.73	)		(1.73	)		(0.27	)		(6.28	)		(0.24	)		(0.19	)

Net asset value, end of period		$21.25			$20.48			$17.48			$18.09			$22.94			$20.62


Total return^c		11.97%			28.11%			(1.79)%			5.62%			12.46%			28.63%

Ratios to average net assets^d

Expenses		1.08%	^e		1.12%	^e		1.05%	^e		1.03%			1.04%			1.04%

Net investment income (loss)		(0.36)%			(0.39)%			(0.44)%			(0.52)%			0.25%			1.02%

Supplemental data

Net assets, end of period (000’s)		$125,501			$118,875			$113,028			$223,807			$256,098			$285,477

Portfolio turnover rate		11.60%			24.96%			36.26%	^f		23.23%			93.53%			28.27%

^bBased on average daily shares outstanding.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fExcludes the value of portfolio securities delivered as a result of a redemption in-kind.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FLG-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2018 (unaudited)


Franklin Large Cap Growth VIP Fund
		Shares		Value
	Common Stocks 100.3%
	Consumer Discretionary 14.3%
a	Amazon.com Inc.		6,135	$	10,428,273
	Aptiv PLC		9,872		904,571
a	Booking Holdings Inc.		820		1,662,214
a	Charter Communications Inc., A		4,551		1,334,399
	Las Vegas Sands Corp.		16,791		1,282,161
a	Netflix Inc.		3,089		1,209,127
	The Walt Disney Co.		7,169		751,383
	Wynn Resorts Ltd.		3,293		551,051

					18,123,179

	Consumer Staples 4.3%
	Constellation Brands Inc., A		8,281		1,812,462
	Lamb Weston Holdings Inc.		17,116		1,172,617
a	Monster Beverage Corp.		20,889		1,196,940
	Pinnacle Foods Inc.		18,666		1,214,410

					5,396,429

	Energy 1.1%
	Diamondback Energy Inc.		11,086		1,458,585

	Financials 7.3%
a	Athene Holding Ltd., A		13,762		603,326
	The Charles Schwab Corp.		42,786		2,186,364
	Intercontinental Exchange Inc.		17,225		1,266,899
	MarketAxess Holdings Inc.		7,813		1,545,880
	MSCI Inc.		4,097		677,767
	S&P Global Inc.		6,749		1,376,054
a	SVB Financial Group		5,520		1,593,955

					9,250,245

	Health Care 9.5%
a	ABIOMED Inc.		4,132		1,690,195
a	Celgene Corp.		7,750		615,505
a	Clovis Oncology Inc.		7,799		354,621
a	Edwards Lifesciences Corp.		12,371		1,800,846
a	Heron Therapeutics Inc.		27,758		1,078,398
a	Intuitive Surgical Inc.		1,659		793,798
	Medtronic PLC		8,071		690,958
a	Nevro Corp.		7,966		636,085
a	Sage Therapeutics Inc.		1,258		196,915
	UnitedHealth Group Inc.		12,676		3,109,930
	West Pharmaceutical Services Inc.		11,383		1,130,218

					12,097,469

	Industrials 11.3%
	Allegiant Travel Co.		2,893		401,982
	The Boeing Co.		5,331		1,788,604
a	CoStar Group Inc.		6,136		2,531,898
	Honeywell International Inc.		8,212		1,182,939
a	IHS Markit Ltd.		22,035		1,136,786
	Raytheon Co.		14,585		2,817,530
	Rockwell Automation Inc.		5,278		877,362
	Roper Technologies Inc.		3,261		899,742
	Stanley Black & Decker Inc.		6,197		823,023
a	Univar Inc.		21,512		564,475


FLG-8		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)


Franklin Large Cap Growth VIP Fund (continued)
		Shares		Value
	Common Stocks (continued)
	Industrials (continued)
a	Verisk Analytics Inc.		12,259	$	1,319,559

					14,343,900

	Information Technology 47.5%
a	2U Inc.		15,380		1,285,153
a	Adobe Systems Inc.		10,435		2,544,157
a	Adyen NV (Netherlands)		300		165,351
a	Alibaba Group Holding Ltd., ADR (China)		5,331		989,060
a	Alphabet Inc., A		3,629		4,097,831
a	Alphabet Inc., C		1,014		1,131,269
	Amphenol Corp., A		3,513		306,158
	Analog Devices Inc.		9,752		935,412
	Apple Inc.		35,025		6,483,478
	Applied Materials Inc.		22,871		1,056,411
a	Autodesk Inc.		11,264		1,476,598
a	Avalara Inc.		1,800		96,066
	Broadcom Inc.		5,135		1,245,956
a	DocuSign Inc.		2,300		121,785
a	Electronic Arts Inc.		10,275		1,448,981
a	Facebook Inc., A		27,933		5,427,941
a	Fiserv Inc.		14,052		1,041,113
a	InterXion Holding NV (Netherlands)		19,875		1,240,598
	Mastercard Inc., A		32,890		6,463,543
	Microsoft Corp.		54,017		5,326,616
	Monolithic Power Systems		7,629		1,019,768
	NVIDIA Corp.		8,861		2,099,171
a	PayPal Holdings Inc.		11,738		977,423
a	Pluralsight Inc., A		2,800		68,460
a	Salesforce.com Inc.		16,134		2,200,678
a	ServiceNow Inc.		17,362		2,994,424
a	Spotify Technology SA		3,767		633,760
	Visa Inc., A		43,318		5,737,469
	Xilinx Inc.		9,819		640,788
a	Zendesk Inc.		17,307		943,058

					60,198,476

	Materials 1.1%
a	Axalta Coating Systems Ltd.		23,209		703,465
a	Ingevity Corp.		8,218		664,507

					1,367,972

	Real Estate 3.9%
	American Tower Corp.		7,083		1,021,156
	Equinix Inc.		1,960		842,585
a	SBA Communications Corp., A		18,318		3,024,668

					4,888,409


	Total Common Stocks (Cost $64,674,012)				127,124,664


		Semiannual Report			FLG-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Large Cap Growth VIP Fund (continued)



		Principal Amount		Value
	Short Term Investments (Cost $148,654) 0.1%
	Repurchase Agreements 0.1%
b	Joint Repurchase Agreement, 2.10%, 7/02/18 (Maturity Value $148,680) BNP Paribas Securities Corp. (Maturity Value $53,355) Deutsche Bank Securities Inc. (Maturity Value $1,952) HSBC Securities (USA) Inc. (Maturity Value $93,373)
	Collateralized by U.S. Government Agency Securities, 0.00% - 3.625%, 9/18/18 - 6/19/23; ^cU.S. Treasury Bill, 10/04/18 - 10/18/18; and U.S. Treasury Note, 2.00% - 3.50%, 5/15/20 - 8/31/21 (valued at $151,712)	$	148,654	$	148,654

	Total Investments (Cost $64,822,666) 100.4%				127,273,318
	Other Assets, less Liabilities (0.4)%				(558,766	)

	Net Assets 100.0%			$	126,714,552

See Abbreviations on page FLG-19.

^aNon-income producing.

^bSee Note 1(c) regarding joint repurchase agreement.

^cThe security was issued on a discount basis with no stated coupon rate.


FLG-10		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2018 (unaudited)


	Franklin Large Cap Growth VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	64,674,012
Cost - Unaffiliated repurchase agreements		148,654

Value - Unaffiliated issuers	$	127,124,664
Value - Unaffiliated repurchase agreements		148,654
Receivables:
Capital shares sold		281
Dividends		16,242
Other assets		83

Total assets		127,289,924

Liabilities:
Payables:
Investment securities purchased		322,541
Capital shares redeemed		66,203
Management fees		80,034
Distribution fees		53,281
Reports to shareholders		30,958
Accrued expenses and other liabilities		22,355

Total liabilities		575,372

Net assets, at value	$	126,714,552

Net assets consist of:
Paid-in capital	$	59,223,017
Undistributed net investment income (loss)		(226,787	)
Net unrealized appreciation (depreciation)		62,450,652
Accumulated net realized gain (loss)		5,267,670

Net assets, at value	$	126,714,552


Class 1:
Net assets, at value	$	1,213,875

Shares outstanding		55,729

Net asset value and maximum offering price per share	$	21.78


Class 2:
Net assets, at value	$	125,500,677

Shares outstanding		5,906,456

Net asset value and maximum offering price per share	$	21.25


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FLG-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2018 (unaudited)


	Franklin Large Cap Growth VIP Fund
Investment income:
Dividends:
Unaffiliated issuers	$	435,400
Interest:
Unaffiliated issuers		14,409

Total investment income		449,809

Expenses:
Management fees (Note 3a)		469,341
Distribution fees: (Note 3c)
Class 2		154,968
Custodian fees (Note 4)		589
Reports to shareholders		27,022
Professional fees		18,993
Trustees’ fees and expenses		299
Other		5,446

Total expenses		676,658
Expense reductions (Note 4)		(62	)

Net expenses		676,596

Net investment income (loss)		(226,787	)

Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		5,294,572
Foreign currency transactions		145

Net realized gain (loss)		5,294,717

Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		8,807,301

Net realized and unrealized gain (loss)		14,102,018

Net increase (decrease) in net assets resulting from operations	$	13,875,231


FLG-12		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets


	Franklin Large Cap Growth VIP Fund
	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income (loss)	$	(226,787	)	$	(473,904	)
Net realized gain (loss)		5,294,717			10,317,956
Net change in unrealized appreciation (depreciation)		8,807,301			20,237,623

Net increase (decrease) in net assets resulting from operations		13,875,231			30,081,675

Distributions to shareholders from:
Net investment income:
Class 1		—			(9,601	)
Class 2		—			(751,572	)
Net realized gains:
Class 1		(89,524	)		(77,085	)
Class 2		(9,610,684	)		(9,605,025	)

Total distributions to shareholders		(9,700,208	)		(10,443,283	)

Capital share transactions: (Note 2)
Class 1		79,446			49,428
Class 2		2,492,603			(13,631,397	)

Total capital share transactions		2,572,049			(13,581,969	)

Net increase (decrease) in net assets		6,747,072			6,056,423
Net assets:
Beginning of period		119,967,480			113,911,057

End of period	$	126,714,552		$	119,967,480

Undistributed net investment income (loss) included in net assets:
End of period	$	(226,787	)	$	—


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FLG-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Large Cap Growth VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eighteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Large Cap Growth VIP Fund (Fund) is included in this report. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. At June 30, 2018, 70.3% of the Fund’s shares were held through one insurance company. Investment activities of these insurance company separate accounts could have a material impact on the Fund. The Fund offers two classes of shares: Class 1 and Class 2. Each class of shares may differ by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Investments in repurchase agreements are valued at cost, which approximates fair value.


FLG-14		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Large Cap Growth VIP Fund (continued)

b. Foreign Currency Translation

the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period.

c. Joint Repurchase Agreement

d. Income and Deferred Taxes


		Semiannual Report		FLG-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Large Cap Growth VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

d. Income and Deferred Taxes (continued)

e. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent

differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

f. Accounting Estimates

g. Guarantees and Indemnifications


FLG-16		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Large Cap Growth VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2018, there were an unlimited number of shares authorized ( without par value ). Transactions in the Fund’s shares were as follows:


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 1 Shares:
Shares issued in reinvestment of distributions		3,993		$	89,524			4,592		$	86,686
Shares redeemed		(454	)		(10,078	)		(1,833	)		(37,258	)

Net increase (decrease)		3,539		$	79,446			2,759		$	49,428

Class 2 Shares:
Shares sold.		401,811		$	8,938,769			325,624		$	6,237,303
Shares issued in reinvestment of distributions		439,446			9,610,684			559,816			10,356,597
Shares redeemed		(738,592	)		(16,056,850	)		(1,547,426	)		(30,225,297	)

Net increase (decrease)		102,665		$	2,492,603			(661,986	)	$	(13,631,397	)

3. Transactions with Affiliates


Subsidiary		Affiliation
Franklin Advisers, Inc. (Advisers)		Investment manager
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent

a. Management Fees

The Fund pays an investment management fee to Advisers based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
0.750%		Up to and including $500 million
0.625%		Over $500 million, up to and including $1 billion
0.500%		In excess of $1 billion

For the period ended June 30, 2018, the annualized gross effective investment management fee rate was 0.750% of the Fund’s average daily net assets.

b. Administrative Fees


		Semiannual Report			FLG-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Large Cap Growth VIP Fund (continued)

3. Transactions with Affiliates (continued)

c. Distribution Fees

d. Transfer Agent Fees

Investor Services, under terms of an agreement, performs shareholder servicing for the Fund and is not paid by the Fund for the services.

e. Interfund Transactions

The Fund engaged in purchases and sales of investments with funds or other accounts that have common investment managers (or affiliated investment managers), directors, trustees or officers. During the period ended June 30, 2018, these purchase and sale transactions aggregated $93,292 and $0, respectively.

4. Expense Offset Arrangement

5. Income Taxes

At June 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


Cost of investments	$	64,849,199

Unrealized appreciation	$	63,205,054
Unrealized depreciation		(780,935	)

Net unrealized appreciation (depreciation)	$	62,424,119

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of foreign currency transactions, passive foreign investment company shares and wash sales.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2018, aggregated $14,344,806 and $20,560,146, respectively.

7. Credit Facility


FLG-18		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Large Cap Growth VIP Fund (continued)

8. Fair Value Measurements

•

Level 1 – quoted prices in active markets for identical financial instruments

•

Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

•

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2018, in valuing the Fund’s assets carried at fair value, is as follows:


	Level 1		Level 2		Level 3		Total

Assets:
Investments in Securities:^a
Equity Investments	$	127,124,664	$	—	$	—	$	127,124,664
Short Term Investments		—		148,654		—		148,654

Total Investments in Securities	$	127,124,664	$	148,654	$	—	$	127,273,318

^aFor detailed categories, see the accompanying Statement of Investments.

9. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations


Selected Portfolio

ADR		American Depositary Receipt


		Semiannual Report			FLG-19

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Franklin Mutual Global Discovery VIP Fund

This semiannual report for Franklin Mutual Global Discovery VIP Fund covers the period ended June 30, 2018.

Class 1 Performance Summary as of June 30, 2018

The Fund’s Class 1 Shares had a -1.37% total return* for the six-month period ended June 30, 2018.


		Semiannual Report			MGD-1

FRANKLIN MUTUAL GLOBAL DISCOVERY VIP FUND

Fund Goal and Main Investments

The Fund seeks capital appreciation. Under normal market conditions, the Fund invests primarily in US and foreign equity securities that the investment manager believes are available at market prices less than their intrinsic value. The equity securities in which the Fund invests are primarily common stock. To a lesser extent, the Fund also invests in merger arbitrage securities and the debt and equity of distressed companies. The Fund may invest substantially and potentially up to 100% of its assets in foreign securities, which may include sovereign debt and participations in foreign government debt.

Fund Risks

All investments involve risks, including possible loss of principal. Value securities may not increase in price as anticipated, or may decline further in value. The Fund’s investments in foreign securities involve certain risks including currency fluctuations, and economic and political uncertainties. Because the Fund may invest at least a significant portion of its assets in companies in a specific region, including Europe, the Fund is subject to greater risks of adverse developments in that region and/or the surrounding regions than a fund that is more broadly diversified geographically. Securities issued by smaller and midsize companies may be more volatile in price than those of larger companies, involve substantial risks and should be considered speculative. Derivatives involve costs and can create economic leverage in the Fund’s portfolio which may result in significant volatility and cause the Fund to participate in losses (as well as gains) in an amount that exceeds the Fund’s initial investment. The Fund’s investments in companies engaged in mergers, reorganizations or liquidations also involve special risks as pending deals may not be completed on time or on favorable terms. The Fund may invest in lower rated bonds, which entail higher credit risk. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Fund’s benchmark, the MSCI World Index, posted a +0.76% total return and the

Geographic Composition*

Based on Total Net Assets as of 6/30/18

LOGO

*Figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

Standard & Poor’s^® 500 Index generated a +2.65% total return for the same period.¹

Economic and Market Overview

Global markets reflected investor concerns about tensions in the Korean peninsula and political uncertainties in the US and the European Union, as well as worries that strong economic

1. Source: Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).


MGD-2		Semiannual Report

FRANKLIN MUTUAL GLOBAL DISCOVERY VIP FUND

growth and rising inflation in some parts of the world, particularly in the US, would lead central banks to increase interest rates sooner than expected. Markets were further pressured by the Trump administration’s protectionist trade policies, uncertainty surrounding the US-China trade relationship, and a broad sell-off in information technology stocks in March due to a potential for tighter regulation in the sector arising from concerns about consumer data privacy. An overall easing of tensions in the Korean peninsula and intermittent US-China trade negotiations partially offset some of these concerns. However, US trade disputes with its allies and China near period-end dampened investor sentiment.

The Bank of Japan left its benchmark interest rate unchanged during the period and continued its monetary stimulus measures.

Investment Strategy

At Franklin Mutual Advisors, we are committed to our distinctive value approach to investing. Our major investment strategy is investing in undervalued stocks. When selecting undervalued equities, we are attracted to what we believe are fundamentally strong companies with healthy balance sheets, high-quality assets, substantial free cash flow and shareholder-oriented management teams and whose stocks are trading at discounts to our assessment of the companies’ intrinsic or business value. We also look for asset-rich companies whose shares may be trading at depressed levels due to concerns over short-term earnings disappointments, litigation, management strategy or other perceived negatives. While the vast majority of our undervalued equity investments are made in publicly traded companies globally, we may invest occasionally in privately held companies as well.

We complement this more traditional investment strategy with two others. One is distressed investing, which is complex and can take many forms. The most common distressed investment the Fund undertakes is the purchase of financially troubled or bankrupt companies’ debt at a substantial discount to face value. After the financially distressed company is reorganized, often in bankruptcy court, the old debt is typically replaced with new securities issued by the financially stronger company.

The other piece of our investment strategy is participating in arbitrage situations, another highly specialized field. When companies announce proposed mergers or takeovers, commonly referred to as “deals,” the target company may trade at a discount to the bid it ultimately accepts. One form of

2. Source: Bureau of Labor Statistics.

3. Please see Index Descriptions following the Fund Summaries.


		Semiannual Report			MGD-3

FRANKLIN MUTUAL GLOBAL DISCOVERY VIP FUND

arbitrage involves purchasing the target company’s stock when it is trading below the value we believe it would receive in a deal. In keeping with our commitment to a relatively conservative investment approach, we typically focus our arbitrage efforts on announced deals, and eschew rumored deals or other situations we consider relatively risky.

In addition, it is our practice to hedge the Fund’s currency exposure when we deem it advantageous for our shareholders.

What is meant by “hedge”?

To hedge an investment is to take a position intended to offset potential losses/gains that may be incurred by a companion financial instrument.

Manager’s Discussion

In the first half of 2018, positive corporate fundamentals were overshadowed by political and economic concerns. Corporate profits in the US and other developed markets continued their impressive year-over-year pace of growth. In the US and other developed markets, economic activity moderated during the first quarter, but appeared to have recovered during the second quarter. Financial markets were also aided by improved industrial commodity prices, most notably crude oil. Nonetheless, investor sentiment became less upbeat and volatility returned to financial markets, after an historically calm 2017.

As investors entered 2018, overall US equity market valuations

(e.g., price-to-earnings, price-to-book or price-to-sales) were elevated relative to most historical benchmarks. The uneven equity market performance during the period and the strong pace of corporate earnings growth helped to reduce valuations somewhat. At the same time, the rise in volatility provided us with select opportunities to initiate or add to positions in companies that we believed were trading at undeservedly discounted prices.

A further escalation of trade-related rhetoric and tariffs, in our view, could have important consequences for the US and abroad. We have already begun to see disruptions to global supply chains and added pressure on China’s financial and credit markets. Additional tariffs imposed by the US and its trading partners could rattle business confidence, curb corporate earnings growth, undermine favorable fundamentals in specific industries, provoke further financial market volatility and raise uncertainty regarding the solid pace of synchronized global growth.


Top 10 Sectors/Industries
6/30/18
	% of Total Net Assets
Banks		12.1%
Oil, Gas & Consumable Fuels		9.3%
Pharmaceuticals		9.2%
Insurance		8.4%
Media		5.4%
Software		4.7%
Health Care Equipment & Supplies		4.6%
Tobacco		3.2%
Communications Equipment		2.7%
Automobiles		2.6%

Europe’s equity market overall was still trading at an attractively lower price-to-earnings multiple and higher dividend yield than the US equity market at period-end. However, in addition to trade tensions, we are paying close attention to Brexit negotiations, Italy’s new populist government, a potentially fraying relationship between Germany’s two conservative parties and the future of the international nuclear deal with Iran. As of period-end, we still believe Europe’s economic recovery is fairly resilient, but any of the aforementioned challenges has the potential to fuel volatility and even slow economic growth. In such an environment, we believe domestically oriented companies may fare relatively better.

In Asia, we have said for some time that China needs to address the high level of corporate leverage, and the People’s Bank of China has recently mandated that much of the debt residing in the shadow banking market be brought back onto bank balance sheets. The resulting burden may impair bank earnings in the short term, which, in our view, is underappreciated by many investors and could create some investment opportunities. Meanwhile, Japan’s government has proposed further amendments to its Corporate Governance Code. We believe the proposals have the potential to drive further improvements in capital allocation and operating discipline, which have long been a concern of investors. We have become more interested in finding opportunities to take advantage of this emerging trend.

Mergers and acquisitions (M&A) have remained active. In the first half of 2018, the market received some clarity regarding the regulatory environment when a federal judge ruled in favor


MGD-4		Semiannual Report

FRANKLIN MUTUAL GLOBAL DISCOVERY VIP FUND

of AT&T and Time Warner⁴, and against the US Department of Justice (DOJ) in its antitrust lawsuit. The judge decided that the DOJ had failed to show that the merger would be anticompetitive, and the deal closed promptly after the opinion was released. In response, the shares of companies involved in several other pending deals traded higher, indicating a higher expected probability of closing. The market also saw the development of a bidding war between The Walt Disney Company and Comcast⁵ for control of Twenty-First Century Fox⁵ and Sky. As the year began, Disney had a deal to buy Fox and Fox had an offer pending to acquire the 61% of Sky it did not own. Comcast subsequently launched bids for both companies, and when Fox raised its bid for Sky, Comcast promptly raised its bid to a higher level. Comcast has indicated it will not bid further for Fox and, while Fox could raise its bid for Sky, it appears most likely that Comcast will purchase Sky. This bidding war showed the ongoing uncertainty in media, in which major media firms believe they need even more scale to compete with internet rivals that are experiencing significant growth. We expect ongoing activity in M&A markets and, with the increased regulatory clarity provided by the Time Warner decision, further opportunities in merger arbitrage.

Finding mispriced risk in credit markets remains difficult due in part to the decline in debt covenants, which include terms that restrict financial activities by the borrower or set parameters for specific financial metrics. The search is also complicated by private equity firms involved in leveraged buyout transactions using increasingly liberal interpretations of credit agreements and bond indentures to potentially shift valuable assets beyond the reach of creditors. We have directed much of our focus on out-of-favor industries in pursuit of securities with the potential to benefit most from liquidity-enhancing events, such as asset sales, the ability to issue secured debt within existing agreements, and free-cash flow that could buy time for a company to weather its financial storm.

Turning to Fund performance, top contributors included UK-based pharmaceutical company GlaxoSmithKline, Netherlands-based Koninklijke Philips and Finland-based global communications and information technology provider Nokia.

Investors reacted positively to GlaxoSmithKline’s March announcements that it had pulled out of the auction for Pfizer’s⁵ consumer health business and agreed to buy Novartis


Top 10 Holdings
6/30/18
Company *Sector/Industry, Country*	% of Total Net Assets
Medtronic PLC Health Care Equipment & Supplies, U.S.		2.8%
Novartis AG Pharmaceuticals, Switzerland		2.5%
Eli Lilly & Co. Pharmaceuticals, U.S.		2.4%
Royal Dutch Shell PLC Oil, Gas & Consumable Fuels, U.K.		2.3%
Merck & Co. Inc. Pharmaceuticals, U.S.		2.2%
British American Tobacco PLC Tobacco, U.K.		2.2%
GlaxoSmithKline PLC Pharmaceuticals, U.K.		2.1%
The Walt Disney Co. Media, U.S.		2.0%
NN Group NV Insurance, Netherlands		1.9%
Citizens Financial Group Inc. Banks, U.S.		1.9%

out of its consumer health care joint venture for $13 billion. In our view, not purchasing the Pfizer consumer business at a high price demonstrated capital discipline and the ability to exercise restraint by not overpaying for strategically desirable assets, thus enhancing management credibility. In addition, not consummating the Pfizer consumer-asset deal eliminated concerns around a potential cut to the dividend to finance the deal, which had been a serious concern for investors. Also, investors have become more willing to give Glaxo some credit for research and development returns improving under the new management team.

Koninklijke Philips is near the end of its restructuring efforts. In line with our initial investment thesis, the company has almost fully pivoted its business model from being an industrial conglomerate to becoming a focused health care technology company. In April, Philips reported better-than-expected results, particularly strong order growth overall and sales growth within its diagnostics and treatment business. Recent positive results have increased our confidence in management’s ability to deliver on its long-term strategy and targets.

Nokia announced solid fourth quarter and full-year 2017 results in February 2018, particularly better-than-expected profits for

4. Not held at period-end.

5. Not a Fund holding.


		Semiannual Report			MGD-5

FRANKLIN MUTUAL GLOBAL DISCOVERY VIP FUND

2017 and significant improvement in cash flow. Management also issued a new earnings target for 2020 that was higher than many investors had anticipated. Subsequent quarterly results issued in April 2018 were weaker than expected, but management emphasized the company’s strong levels of new and existing orders and indicated that sales for full-year 2018 could exceed its previous guidance. We believe Nokia is serious about cutting costs and improving cash flow following its acquisition of Alcatel in 2016 to increase its dividend in 2018 and stay on course to reach its 2020 earnings target.

During the period under review, Fund investments that detracted from performance included British American Tobacco, US-based industrials company General Electric (GE) and US-based digital security and storage provider Symantec.

British American Tobacco’s stock price faced downward pressure due to the potential for additional regulation in the US and concerns regarding next generation products. In March 2018, the US Food and Drug Administration issued an Advance Notice of Proposed Rulemaking, which started the process of examining the possibility of regulating nicotine levels in combustible cigarettes. The process may not result in regulation, but if it does, many experts believe the review could take seven to 10 years before a rule is adopted in the marketplace. Meanwhile, JUUL, produced by JUUL Labs⁵ has emerged as a popular e-cigarette in the US. JUUL’s growth rate is high and its product is popular with young consumers. It is unclear to what degree JUUL is cannibalizing the combustible market, but it has hurt investor sentiment toward the industry.

In January 2018, General Electric (GE) announced a greater-than-expected $6.2 billion after-tax charge related to its insurance subsidiary at GE Capital. Management also moved ahead with what amounts to a breakup of GE. In May 2018, the company announced the merger of its transportation operations into Wabtec⁵, and in June 2018 it announced a plan to spin off its health care division and divest its stake in oil-services firm Baker Hughes. Once completed, we believe the moves will streamline GE and enable the company to reduce debt and build up a cash buffer, as well as help management better focus on its key aviation, power and renewable energy divisions.

Shares of Symantec tumbled in May 2018 when the company disclosed an internal investigation resulting from concerns raised by a former employee that could result in a restatement of prior financials, as well as lowered earnings guidance. The stock partially recovered when Symantec’s management provided more information regarding the investigation and reassured investors that financial statements would likely not need to be restated.

During the period, the Fund held currency forwards and futures seeking to hedge most of the currency risk of the portfolio’s non-US dollar investments. The hedges had a positive overall impact on the Fund’s performance because of the appreciation of the US dollar versus the hedged currencies.

What is a currency forward?

A currency forward is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date.

What is a future?

A future is an agreement between the Fund and a counterparty made through a US or foreign futures exchange to buy or sell an underlying instrument or asset at a specific price on a future date.

As fellow shareholders, we found recent relative and absolute performance disappointing, but it is not uncommon for our strategy to lag the equity markets at times. We remain committed to our disciplined, value investment approach as we seek to generate attractive, long-term, risk-adjusted returns for shareholders.

Thank you for your participation in Franklin Mutual Global Discovery VIP Fund. We look forward to serving your future investment needs.


MGD-6		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Class 1 Fund Expenses

Actual Fund Expenses

The table below provides information about the actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of ongoing Fund expenses but does not include the effect of ongoing Contract expenses, is used to calculate the “Ending Account Value.” You can estimate the Fund-level expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number under the headings “Actual” and “Fund-Level Expenses Paid During Period” (if Fund-Level Expenses Paid During Period were $ 7.50, then 8.6 × $7.50 = $64.50). In this illustration, the estimated expenses paid this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Actual
(actual return after expenses)

Hypothetical
(5% annual return before expenses)

Share Class

Beginning Account
Value 1/1/18

Ending Account
Value 6/30/18

Fund-Level
Expenses Paid
During Period
1/1/18–6/30/18

^1,2

Ending Account

Value 6/30/18

Fund-Level
Expenses Paid
During Period
1/1/18–6/30/18

^1,2

Net
Annualized
Expense
Ratio

Class 1

$1,000

$986.30

$4.83

$1,019.93

$4.91

0.98%

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above — in the far right column — multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include any ongoing expenses of the Contract for which the Fund is an investment option or acquired fund fees and expenses.


		Semiannual Report			MGD-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Mutual Global Discovery VIP Fund


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 1
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$20.38			$20.22			$19.85			$22.61			$23.31			$20.55


Income from investment operations^a:

Net investment income^b		0.23			0.47			0.41			0.37			0.68	^c		0.46

Net realized and unrealized gains (losses)		(0.51	)		1.29			1.92			(1.17	)		0.76			5.03

Total from investment operations		(0.28	)		1.76			2.33			(0.80	)		1.44			5.49


Less distributions from:

Net investment income		—			(0.42	)		(0.39	)		(0.69	)		(0.57	)		(0.58	)

Net realized gains		—			(1.18	)		(1.57	)		(1.27	)		(1.57	)		(2.15	)

Total distributions		—			(1.60	)		(1.96	)		(1.96	)		(2.14	)		(2.73	)

Net asset value, end of period		$20.10			$20.38			$20.22			$19.85			$22.61			$23.31


Total return^d		(1.37)%			8.99%			12.32%			(3.39)%			5.98%			27.95%

Ratios to average net assets^e

Expenses^f,g		0.98%	^h		1.01%	^h		1.01%	^h		1.02%	^h		1.00%			0.97%

Expenses incurred in connection with securities sold short		0.01%			—%			0.01%			0.02%			0.03%			—%	ⁱ

Net investment income		2.26%			2.29%			2.10%			1.71%			2.85%^c			2.13%

Supplemental data

Net assets, end of period (000’s)		$3,580			$3,189			$3,084			$2,632			$2,313			$2,465

Portfolio turnover rate		16.69%			17.49%			17.54%			21.88%			22.18%			15.58%

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.34 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.40%.

^eRatios are annualized for periods less than one year.

^fIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(d).

^gBenefit of expense reduction rounds to less than 0.01%.

^hBenefit of waiver and payments by affiliates rounds to less than 0.01%.

ⁱRounds to less than 0.01%.


MGD-8		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Franklin Mutual Global Discovery VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 2
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$19.80			$19.69			$19.37			$22.11			$22.84			$20.17


Income from investment operations^a:

Net investment income^b		0.20			0.41			0.35			0.32			0.60^c			0.42

Net realized and unrealized gains (losses)		(0.50	)		1.25			1.87			(1.16	)		0.75			4.92

Total from investment operations		(0.30	)		1.66			2.22			(0.84	)		1.35			5.34


Less distributions from:

Net investment income		—			(0.37	)		(0.33	)		(0.63	)		(0.51	)		(0.52	)

Net realized gains		—			(1.18	)		(1.57	)		(1.27	)		(1.57	)		(2.15	)

Total distributions		—			(1.55	)		(1.90	)		(1.90	)		(2.08	)		(2.67	)

Net asset value, end of period		$19.50			$19.80			$19.69			$19.37			$22.11			$22.84


Total return^d		(1.52)%			8.71%			12.06%			(3.65)%			5.71%			27.61%

Ratios to average net assets^e

Expenses^f,g		1.23%^h			1.26%^h			1.26%^h			1.27%^h			1.25%			1.22%

Expenses incurred in connection with securities sold short		0.01%			—%			0.01%			0.02%			0.03%			—%ⁱ

Net investment income		2.01%			2.04%			1.85%			1.46%			2.60%^c			1.88%

Supplemental data

Net assets, end of period (000’s)		$588,113			$631,179			$630,397			$629,366			$685,711			$684,780

Portfolio turnover rate		16.69%			17.49%			17.54%			21.88%			22.18%			15.58%

^bBased on average daily shares outstanding.

^eRatios are annualized for periods less than one year.

^gBenefit of expense reduction rounds to less than 0.01%.

^hBenefit of waiver and payments by affiliates rounds to less than 0.01%.

ⁱRounds to less than 0.01%.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			MGD-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Franklin Mutual Global Discovery VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 4
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$20.17			$20.02			$19.66			$22.39			$23.10			$20.38


Income from investment operations^a:

Net investment income^b		0.19			0.40			0.34			0.30			0.61	^c		0.40

Net realized and unrealized gains (losses)		(0.50	)		1.27			1.89			(1.17	)		0.73			4.97

Total from investment operations		(0.31	)		1.67			2.23			(0.87	)		1.34			5.37


Less distributions from:

Net investment income		—			(0.34	)		(0.30	)		(0.59	)		(0.48	)		(0.50	)

Net realized gains		—			(1.18	)		(1.57	)		(1.27	)		(1.57	)		(2.15	)

Total distributions		—			(1.52	)		(1.87	)		(1.86	)		(2.05	)		(2.65	)

Net asset value, end of period		$19.86			$20.17			$20.02			$19.66			$22.39			$23.10


Total return^d		(1.54)%			8.61%			11.91%			(3.74)%			5.60%			27.52%

Ratios to average net assets^e

Expenses^f,g		1.33%	^h		1.36%	^h		1.36%	^h		1.37%	^h		1.35%			1.32%

Expenses incurred in connection with securities sold short		0.01%			—%			0.01%			0.02%			0.03%			—%	ⁱ

Net investment income		1.91%			1.94%			1.75%			1.36%			2.50%	^c		1.78%

Supplemental data

Net assets, end of period (000’s)		$36,558			$41,713			$45,262			$49,054			$59,961			$70,354

Portfolio turnover rate		16.69%			17.49%			17.54%			21.88%			22.18%			15.58%

^bBased on average daily shares outstanding.

^eRatios are annualized for periods less than one year.

^gBenefit of expense reduction rounds to less than 0.01%.

^hBenefit of waiver and payments by affiliates rounds to less than 0.01%.

ⁱRounds to less than 0.01%.


MGD-10		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2018 (unaudited)

Franklin Mutual Global Discovery VIP Fund


		Country		Shares/ Units/ Warrants		Value
	Common Stocks and Other Equity Interests 87.8%
	Aerospace & Defense 1.0%
	BAE Systems PLC		United Kingdom		755,507	$	6,453,269

	Auto Components 0.5%
a,b,c	International Automotive Components Group Brazil LLC		Brazil		424,073		9,643
a,b,c	International Automotive Components Group North America LLC		United States		4,052,916		1,213,398
	Toyo Tire & Rubber Co. Ltd.		Japan		136,700		2,001,813

							3,224,854

	Automobiles 1.1%
	General Motors Co.		United States		175,900		6,930,460

	Banks 12.1%
	Barclays PLC		United Kingdom		1,564,265		3,904,302
	BNP Paribas SA		France		106,195		6,599,439
	CIT Group Inc.		United States		136,169		6,864,279
	Citigroup Inc.		United States		162,150		10,851,078
	Citizens Financial Group Inc.		United States		303,023		11,787,595
	First Horizon National Corp.		United States		353,473		6,305,958
	HSBC Holdings PLC		United Kingdom		438,755		4,117,937
	JPMorgan Chase & Co.		United States		42,286		4,406,201
	Societe Generale SA		France		157,880		6,661,740
	Standard Chartered PLC		United Kingdom		442,523		4,047,526
	Wells Fargo & Co.		United States		192,020		10,645,589

							76,191,644

	Building Products 0.9%
	Johnson Controls International PLC		United States		162,300		5,428,935

	Capital Markets 1.2%
	Credit Suisse Group AG		Switzerland		191,359		2,888,547
	Deutsche Bank AG		Germany		207,029		2,230,639
	Guotai Junan Securities Co. Ltd.		China		1,275,797		2,712,230

							7,831,416

	Communications Equipment 2.7%
	Cisco Systems Inc.		United States		169,680		7,301,330
	Nokia OYJ, A		Finland		611,269		3,520,888
	Nokia OYJ, ADR		Finland		1,095,886		6,301,345

							17,123,563

	Construction Materials 0.9%
	LafargeHolcim Ltd., B		Switzerland		121,811		5,950,339

	Consumer Finance 1.3%
	Ally Financial Inc.		United States		93,416		2,454,039
	Capital One Financial Corp.		United States		60,788		5,586,417

							8,040,456

	Containers & Packaging 0.5%
	International Paper Co.		United States		63,500		3,307,080

	Diversified Financial Services 0.8%
	Voya Financial Inc.		United States		101,650		4,777,550


		Semiannual Report			MGD-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)


		Country		Shares/ Units/ Warrants		Value
	Common Stocks and Other Equity Interests (continued)
	Diversified Telecommunication Services 2.4%
	AT&T Inc.		United States		207,839	$	6,673,710
	Koninklijke KPN NV		Netherlands		3,049,719		8,302,115

							14,975,825

	Electric Utilities 2.1%
	Enel SpA		Italy		1,746,880		9,708,881
	PG&E Corp.		United States		79,400		3,379,264

							13,088,145

	Energy Equipment & Services 0.9%
	Baker Hughes a GE Co., A		United States		178,964		5,911,181

	Food & Staples Retailing 1.1%
a	Rite Aid Corp.		United States		391,098		676,599
	Walgreens Boots Alliance Inc.		United States		102,904		6,175,784

							6,852,383

	Health Care Equipment & Supplies 4.6%
	Koninklijke Philips NV		Netherlands		262,635		11,176,997
	Medtronic PLC		United States		204,810		17,533,784

							28,710,781

	Health Care Providers & Services 1.0%
	CVS Health Corp.		United States		97,591		6,279,981

	Hotels, Restaurants & Leisure 2.3%
	Accor SA		France		226,617		11,125,550
	Sands China Ltd.		Hong Kong		648,800		3,468,900

							14,594,450

	Independent Power & Renewable Electricity Producers 0.8%
a	Vistra Energy Corp.		United States		199,533		4,720,951

	Industrial Conglomerates 1.8%
	General Electric Co.		United States		823,100		11,202,391

	Insurance 8.4%
	Alleghany Corp.		United States		2,730		1,569,668
	American International Group Inc.		United States		177,333		9,402,196
	China Pacific Insurance Group Co. Ltd., H		China		1,281,108		4,955,567
	Chubb Ltd.		United States		46,866		5,952,919
	The Hartford Financial Services Group Inc.		United States		161,696		8,267,517
	MetLife Inc.		United States		67,226		2,931,054
	NN Group NV		Netherlands		294,248		11,977,457
	RSA Insurance Group PLC		United Kingdom		501,149		4,496,387
	T&D Holdings Inc.		Japan		199,721		3,003,167

							52,555,932

	IT Services 1.6%
	Cognizant Technology Solutions Corp., A		United States		130,860		10,336,631

	Media 5.4%
a	Charter Communications Inc., A		United States		30,386		8,909,479
a	Cumulus Media Inc., A		United States		9,615		144,225
a	Cumulus Media Inc., B		United States		14,335		225,776
a	DISH Network Corp., A		United States		139,003		4,671,891
	Sky PLC		United Kingdom		403,819		7,793,936


MGD-12		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)


		Country		Shares/ Units/ Warrants		Value
	Common Stocks and Other Equity Interests (continued)
	Media (continued)
	The Walt Disney Co.		United States		118,700	$	12,440,947

							34,186,254

	Metals & Mining 1.2%
	Freeport-McMoRan Inc.		United States		163,070		2,814,588
	thyssenkrupp AG		Germany		159,357		3,876,366
	Warrior Met Coal Inc.		United States		37,173		1,024,860

							7,715,814

	Oil, Gas & Consumable Fuels 9.3%
	Anadarko Petroleum Corp.		United States		62,642		4,588,526
	BP PLC		United Kingdom		925,213		7,065,879
	Crescent Point Energy Corp.		Canada		670,900		4,931,437
	JXTG Holdings Inc.		Japan		669,532		4,658,508
	Kinder Morgan Inc.		United States		428,870		7,578,133
	Marathon Oil Corp.		United States		268,828		5,607,752
	Plains All American Pipeline LP		United States		169,000		3,995,160
	Royal Dutch Shell PLC, A (EUR Traded)		United Kingdom		237,549		8,262,377
	Royal Dutch Shell PLC, A (GBP Traded)		United Kingdom		179,410		6,228,859
	The Williams Cos. Inc.		United States		196,601		5,329,853

							58,246,484

	Pharmaceuticals 9.2%
	Eli Lilly & Co.		United States		176,580		15,067,571
	GlaxoSmithKline PLC		United Kingdom		670,728		13,550,408
	Merck & Co. Inc.		United States		229,318		13,919,603
	Novartis AG, ADR		Switzerland		205,621		15,532,610

							58,070,192

	Semiconductors & Semiconductor Equipment 0.6%
a	Renesas Electronics Corp.		Japan		386,368		3,790,558

	Software 4.7%
a	Avaya Holdings Corp., wts., 12/15/22		United States		5,179		23,953
a	Check Point Software Technologies Ltd.		Israel		107,967		10,546,216
a	Dell Technologies Inc., V		United States		33,415		2,826,241
	Microsoft Corp.		United States		97,236		9,588,442
	Symantec Corp.		United States		305,861		6,316,030

							29,300,882

	Specialty Retail 0.5%
	Dufry AG		Switzerland		23,184		2,958,863

	Technology Hardware, Storage & Peripherals 2.5%
	Hewlett Packard Enterprise Co.		United States		298,680		4,363,715
	Samsung Electronics Co. Ltd.		South Korea		267,805		11,200,559

							15,564,274

	Tobacco 3.2%
	Altria Group Inc.		United States		107,584		6,109,696
	British American Tobacco PLC		United Kingdom		188,332		9,525,640
	British American Tobacco PLC, ADR		United Kingdom		83,985		4,237,043

							19,872,379


		Semiannual Report			MGD-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

Country

Shares/

Units/

Warrants

Value

Common Stocks and Other Equity Interests (continued)

Wireless Telecommunication Services 1.2%

Vodafone Group PLC

United Kingdom

3,096,235

7,516,193

Total Common Stocks and Other Equity Interests
(Cost $467,437,257)

551,710,110

Management Investment Companies
(Cost $3,414,383) 0.6%

Diversified Financial Services 0.6%

Altaba Inc

United States

52,100

3,814,241

Preferred Stocks (Cost $10,006,188) 1.5%

Automobiles 1.5%

Volkswagen AG, 2.784%, pfd

Germany

54,800

9,105,718

Principal Amount

Corporate Notes and Senior Floating Rate
Interests 1.4%

e,f

Cumulus Media New Holdings Inc., Term Loan, 6.60%, (1-month USD LIBOR + 4.50%), 5/13/22

United States

1,864,393

1,856,236

Frontier Communications Corp.

senior note, 10.50%, 9/15/22

United States

3,610,000

3,294,125

senior note, 11.00%, 9/15/25

United States

4,065,000

3,271,106

Total Corporate Notes and Senior Floating Rate Interests (Cost $8,828,592)

8,421,467

Corporate Notes and Senior Floating Rate Interests in Reorganization 1.7%

b,c,g

Broadband Ventures III LLC, secured promissory note, 5.00%, 2/01/12

United States

595

—

iHeartCommunications Inc., senior secured note, first lien, 9.00%, 12/15/19

United States

5,184,000

3,952,800

^e,fTranche D Term Loan, 8.443%, (3-month USD LIBOR + 6.75%), 1/30/19

United States

6,889,154

5,272,786

^e,fTranche E Term Loan, 9.193%, (3-month USD LIBOR + 7.50%), 7/30/19

United States

2,213,880

1,693,873

Total Corporate Notes and Senior Floating Rate Interests in Reorganization (Cost $13,981,307)

10,919,459

Shares

Companies in Liquidation 0.0%^†

a,b,h

Avaya Holdings Corp., Contingent Distribution

United States

1,270,000

—

a,b,h

Avaya Inc., Contingent Distribution

United States

1,668,000

—

a,b

NewPage Corp., Litigation Trust

United States

4,854,000

—

a,b,h

Tribune Media, Litigation Trust, Contingent Distribution

United States

57,557

—

a,h

Vistra Energy Corp., Litigation Trust, Contingent Distribution

United States

11,807,264

95,934

Vistra Energy Corp., Litigation Trust, TRA

United States

199,534

129,697

Total Companies in Liquidation (Cost $1,209,024)

225,631

Total Investments before Short Term Investments
(Cost $504,876,751)

584,196,626


MGD-14		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)


		Country		Principal Amount		Value
	Short Term Investments 6.6%
	U.S. Government and Agency Securities 6.6%
i	FHLB, 7/02/18		United States	$	15,800,000	$	15,800,000
i	U.S. Treasury Bill, ^j11/15/18		United States		3,000,000		2,977,390
	7/05/18 - 12/20/18		United States		23,000,000		22,901,181

	Total U.S. Government and Agency Securities (Cost $41,672,768)						41,678,571

	Total Investments (Cost $546,549,519) 99.6%						625,875,197
	Securities Sold Short (0.6)%						(3,479,801	)
	Other Assets, less Liabilities 1.0%						5,855,302
	Net Assets 100.0%						$628,250,698

				Shares
k	Securities Sold Short (Proceeds $3,292,003) (0.6)%
	Common Stocks (0.6)%
	Internet Software & Services (0.6)%
	Alibaba Group Holding Ltd., ADR		China		18,756		(3,479,801	)

^†Rounds to less than 0.1% of net assets.

^aNon-income producing.

^bFair valued using significant unobservable inputs. See Note 11 regarding fair value measurements.

^cSee Note 8 regarding restricted securities.

^dVariable rate security. The rate shown represents the yield at period end.

^eThe coupon rate shown represents the rate at period end.

^fSee Note 1(f) regarding senior floating rate interests.

^gSee Note 7 regarding credit risk and defaulted securities.

^hContingent distributions represent the right to receive additional distributions, if any, during the reorganization of the underlying company. Shares represent total underlying principal of debt securities.

ⁱThe security was issued on a discount basis with no stated coupon rate.

^jA portion or all of the security has been segregated as collateral for securities sold short. At June 30, 2018, the value of this security pledged amounted to $1,905,529, representing 0.3% of net assets.

^kSee Note 1(d) regarding securities sold short.


		Semiannual Report			MGD-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

At June 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(c).


Futures Contracts
Description	Type		Number of Contracts		Notional Amount*		Expiration Date		Value/ Unrealized Appreciation (Depreciation)
Currency Contracts
EUR/USD		Short		208	$	30,514,900		9/17/18	$	312,029
GBP/USD		Short		232		19,192,200		9/17/18		292,484

Total Futures Contracts									$	604,513

*As of period end.

At June 30, 2018, the Fund had the following forward exchange contracts outstanding. See Note 1(c).


Forward Exchange Contracts
Currency	Counterparty^a		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts
Swiss Franc		BONY		Buy		40,459	$	40,724		7/09/18	$	162	$	—
Swiss Franc		UBSW		Buy		115,441		117,519		7/09/18		—		(859	)
Swiss Franc		UBSW		Buy		125,008		126,121		7/09/18		208		—
Swiss Franc		UBSW		Sell		3,135,375		3,153,571		7/09/18		—		(14,931	)
South Korean Won		HSBK		Buy		842,189,044		772,672		7/13/18		—		(17,331	)
South Korean Won		HSBK		Sell		13,428,910,227		12,381,489		7/13/18		337,408		—
British Pound		HSBK		Sell		18,370,701		24,391,240		8/14/18		79,139		—
Euro		BOFA		Buy		955,931		1,114,289		8/20/18		7,041		—
Euro		BONY		Buy		69,519		80,568		8/20/18		980		—
Euro		HSBK		Buy		1,824,794		2,122,779		8/20/18		17,749		—
Euro		HSBK		Sell		2,921,872		3,419,359		8/20/18		—		(8,069	)
Euro		SSBT		Buy		173,797		202,357		8/20/18		1,511		—
Euro		UBSW		Sell		57,020,253		66,711,415		8/20/18		—		(174,752	)
Japanese Yen		HSBK		Sell		342,621,375		3,115,179		8/20/18		8,656		—
Japanese Yen		UBSW		Buy		2,296,792		20,809		8/20/18		16		—
Japanese Yen		UBSW		Buy		7,888,979		72,123		8/20/18		—		(594	)

Total Forward Exchange Contracts											$	452,870	$	(216,536)

Net unrealized appreciation (depreciation)											$	236,334

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

See Note 9 regarding other derivative information.

See Abbreviations on page MGD-31.


MGD-16		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2018 (unaudited)


	Franklin Mutual Global Discovery VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	546,549,519

Value - Unaffiliated issuers	$	625,875,197
Cash		167,863
Foreign currency, at value (cost $486,892)		490,011
Receivables:
Investment securities sold		1,417,692
Capital shares sold		72,291
Dividends and interest		1,984,889
European Union tax reclaims		276,406
Deposits with brokers for:
Securities sold short		3,667,277
Futures contracts		939,220
Unrealized appreciation on OTC forward exchange contracts		452,870
Other assets		97,205

Total assets		635,440,921

Liabilities:
Payables:
Investment securities purchased		1,730,530
Capital shares redeemed		379,114
Management fees		459,688
Distribution fees		274,829
Variation margin on futures contracts		472,150
Securities sold short, at value (proceeds $3,292,003)		3,479,801
Unrealized depreciation on OTC forward exchange contracts		216,536
Accrued expenses and other liabilities		177,575

Total liabilities		7,190,223

Net assets, at value	$	628,250,698

Net assets consist of:
Paid-in capital	$	476,517,314
Undistributed net investment income		20,638,004
Net unrealized appreciation (depreciation)		79,956,558
Accumulated net realized gain (loss)		51,138,822

Net assets, at value	$	628,250,698


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			MGD-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2018 (unaudited)


	Franklin Mutual Global Discovery VIP Fund

Class 1:
Net assets, at value	$	3,579,943

Shares outstanding		178,148

Net asset value and maximum offering price per share	$	20.10


Class 2:
Net assets, at value	$	588,112,670

Shares outstanding		30,157,648

Net asset value and maximum offering price per share	$	19.50


Class 4:
Net assets, at value	$	36,558,085

Shares outstanding		1,841,161

Net asset value and maximum offering price per share	$	19.86


MGD-18		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2018 (unaudited)


	Franklin Mutual Global Discovery VIP Fund
Investment income:
Dividends: (net of foreign taxes)*
Unaffiliated issuers	$	9,631,953
Interest:
Unaffiliated issuers		857,831
Income from securities loaned (net of fees and rebates)		96,221

Total investment income		10,586,005

Expenses:
Management fees (Note 3a)		3,005,223
Distribution fees: (Note 3c)
Class 2		765,046
Class 4		68,221
Custodian fees (Note 4)		12,690
Reports to shareholders		77,979
Professional fees		72,769
Trustees’ fees and expenses		1,697
Dividends on securities sold short		24,066
Other		18,666

Total expenses		4,046,357
Expense reductions (Note 4)		(1,461	)
Expenses waived/paid by affiliates (Note 3e)		(4,024	)

Net expenses		4,040,872

Net investment income		6,545,133

Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		40,448,815
Foreign currency transactions		(220,675	)
Forward exchange contracts		3,072,755
Futures contracts		582,723
Securities sold short		134,695

Net realized gain (loss)		44,018,313

Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(62,149,576	)
Translation of other assets and liabilities denominated in foreign currencies		(45,523	)
Forward exchange contracts		1,217,399
Futures contracts		1,305,791
Securities sold short		(229,748	)

Net change in unrealized appreciation (depreciation)		(59,901,657	)

Net realized and unrealized gain (loss)		(15,883,344	)

Net increase (decrease) in net assets resulting from operations	$	(9,338,211	)

*Foreign taxes withheld on dividends	$	650,433


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			MGD-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets


	Franklin Mutual Global Discovery VIP Fund
	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	6,545,133		$	13,954,122
Net realized gain (loss)		44,018,313			10,878,079
Net change in unrealized appreciation (depreciation)		(59,901,657	)		32,155,121

Net increase (decrease) in net assets resulting from operations		(9,338,211	)		56,987,322

Distributions to shareholders from:
Net investment income:
Class 1		—			(66,311	)
Class 2		—			(11,249,921	)
Class 4		—			(685,349	)
Net realized gains:
Class 1		—			(186,112	)
Class 2		—			(35,820,607	)
Class 4		—			(2,371,329	)

Total distributions to shareholders		—			(50,379,629	)

Capital share transactions: (Note 2)
Class 1		446,978			82,438
Class 2		(34,303,146	)		(5,225,517	)
Class 4		(4,636,255	)		(4,126,123	)

Total capital share transactions		(38,492,423	)		(9,269,202	)

Net increase (decrease) in net assets		(47,830,634	)		(2,661,509	)
Net assets:
Beginning of period		676,081,332			678,742,841

End of period	$	628,250,698		$	676,081,332

Undistributed net investment income included in net assets:
End of period	$	20,638,004		$	14,092,871


MGD-20		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Mutual Global Discovery VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eighteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Mutual Global Discovery VIP Fund (Fund) is included in this report. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. At June 30, 2018, 46.6% of the Fund’s shares were held through one insurance company. Investment activities of these insurance company separate accounts could have a material impact on the Fund. The Fund offers three classes of shares: Class 1, Class 2 and Class 4. Each class of shares may differ by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.

Investments in open-end mutual funds are valued at the closing NAV.

Certain derivative financial instruments trade in the OTC market. The Fund’s pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to determine the fair value of those instruments. The Fund’s net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.


		Semiannual Report			MGD-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

1. Organization and Significant Accounting

Policies (continued)

a. Financial Instrument Valuation (continued)

calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

b. Foreign Currency Translation

c. Derivative Financial Instruments


MGD-22		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statement of Operations.

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement. At June 30, 2018, the Fund had OTC derivatives in a net liability position of $190,912 and the aggregate value of collateral pledged for such contracts was $0.

for OTC derivatives, if any, is held in segregated accounts with the Fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives. To the extent that the amounts due to the Fund from its counterparties are not subject to collateralization or are not fully collateralized, the Fund bears the risk of loss from counterparty non-performance.

At June 30, 2018, the Fund received $931,625 in United Kingdom Treasury Bonds and U.S. Treasury Notes as collateral for derivatives.

The Fund entered into exchange traded futures contracts primarily to manage exposure to certain foreign currencies. A futures contract is an agreement between the Fund and a counterparty to buy or sell an asset at a specified price on a future date. Required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable in the Statement of Assets and Liabilities.

The Fund entered into OTC forward exchange contracts primarily to manage exposure to certain foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.

See Note 9 regarding other derivative information.

d. Securities Sold Short

The Fund is engaged in selling securities short, which obligates the Fund to replace a borrowed security with the same security at current fair value. The Fund incurs a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund realizes a gain if the price of the security declines between those dates. Gains are limited to the price at which the Fund sold the security short, while losses are potentially unlimited in size.

The Fund is required to establish a margin account with the broker lending the security sold short. While the short sale is outstanding, the broker retains the proceeds of the short sale to the extent necessary to meet margin requirements until the short position is closed out. A deposit must also be maintained with the Fund’s custodian/counterparty broker consisting of cash and/or securities having a value equal to a specified percentage of the value of the securities sold short. The Fund is obligated to pay fees for borrowing the securities sold short and is required


		Semiannual Report			MGD-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

d. Securities Sold Short (continued)

to pay the counterparty any dividends and/or interest due on securities sold short. Such dividends and/or interest and any security borrowing fees are recorded as an expense to the Fund.

e. Securities Lending

The Fund participates in an agency based securities lending program to earn additional income. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of Fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Fund. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned, net of fees paid to the securities lending agent and/or third-party vendor, is reported separately in the Statement of Operations. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower. At June 30, 2018, the Fund had no securities on loan.

f. Senior Floating Rate Interests

g. Income and Deferred Taxes


MGD-24		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.

h. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income and dividends declared on securities sold short are recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

i. Accounting Estimates

j. Guarantees and Indemnifications

2. Shares of Beneficial Interest

At June 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 1 Shares:
Shares sold		30,209		$	621,633			22,957		$	477,994
Shares issued in reinvestment of distributions		—			—			12,814			252,423
Shares redeemed		(8,579	)		(174,655	)		(31,768	)		(647,979	)

Net increase (decrease)		21,630		$	446,978			4,003		$	82,438


		Semiannual Report			MGD-25

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

2. Shares of Beneficial Interest (continued)


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 2 Shares:
Shares sold		547,473		$	10,899,828			1,826,753		$	36,854,231
Shares issued in reinvestment of distributions		—			—			2,456,708			47,070,528
Shares redeemed		(2,268,545	)		(45,202,974	)		(4,417,680	)		(89,150,276	)

Net increase (decrease)		(1,721,072	)	$	(34,303,146	)		(134,219	)	$	(5,225,517	)


Class 4 Shares:
Shares sold		18,384		$	363,219			74,244		$	1,535,006
Shares issued in reinvestment of distributions		—			—			156,592			3,056,678
Shares redeemed		(245,361	)		(4,999,474	)		(423,086	)		(8,717,807	)

Net increase (decrease)		(226,977	)	$	(4,636,255	)		(192,250	)	$	(4,126,123	)

3. Transactions with Affiliates


Subsidiary		Affiliation
Franklin Mutual Advisers, LLC (Franklin Mutual)		Investment manager
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent

a. Management Fees

Effective May 1, 2018, the Fund pays an investment management fee to Franklin Mutual based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
0.875%		Up to and including $4 billion
0.845%		Over $4 billion, up to and including $7 billion
0.825%		Over $7 billion, up to and including $10 billion
0.805%		Over $10 billion, up to and including $13 billion
0.785%		Over $13 billion, up to and including $16 billion
0.765%		Over $16 billion, up to and including $19 billion
0.745%		Over $19 billion, up to and including $22 billion
0.725%		Over $22 billion, up to and including $25 billion
0.705%		Over $25 billion, up to and including $28 billion
0.685%		In excess of $28 billion


MGD-26		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

Prior to May 1, 2018, the Fund paid fees to Franklin Mutual based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
0.950%		Up to and including $200 million
0.935%		Over $200 million, up to and including $700 million
0.900%		Over $700 million, up to and including $1.2 billion
0.875%		Over $1.2 billion, up to and including $4 billion
0.845%		Over $4 billion, up to and including $7 billion
0.825%		Over $7 billion, up to and including $10 billion
0.805%		In excess of $10 billion

For the period ended June 30, 2018, the annualized gross effective investment management fee rate was 0.919% of the Fund’s average daily net assets.

b. Administrative Fees

Under an agreement with Franklin Mutual, FT Services provides administrative services to the Fund. The fee is paid by Franklin Mutual based on the Fund’s average daily net assets, and is not an additional expense of the Fund.

c. Distribution Fees

d. Transfer Agent Fees

Investor Services, under terms of an agreement, performs shareholder servicing for the Fund and is not paid by the Fund for the services.

e. Investments in Affiliated Management Investment Companies


	Number of Shares Held at Beginning of Period		Gross Additions		Gross Reductions			Number of Shares Held at End of Period		Value at End of Period		Dividend Income		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 1.51%		—		32,695,000		(32,695,000	)		—	$	—	$	—	$	—	$	—


		Semiannual Report			MGD-27

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

4. Expense Offset Arrangement

5. Income Taxes

At June 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


Cost of investments	$	544,261,714

Unrealized appreciation	$	133,124,321
Unrealized depreciation		(54,148,247	)

Net unrealized appreciation (depreciation)	$	78,976,074

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of foreign currency transactions.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities and securities sold short) for the period ended June 30, 2018, aggregated $103,932,974 and $147,388,457, respectively.

7. Credit Risk and Defaulted Securities

The Fund may purchase the pre-default or defaulted debt of distressed companies. Distressed companies are financially troubled and could be or are already involved in financial restructuring or bankruptcy. Risks associated with purchasing these securities include the possibility that the bankruptcy or other restructuring process takes longer than expected, or that distributions in restructuring are less than anticipated, either or both of which may result in unfavorable consequences to the Fund. If it becomes probable that the income on debt securities, including those of distressed companies, will not be collected, the Fund discontinues accruing income and recognizes an adjustment for uncollectible interest.

At June 30, 2018, the aggregate long value of distressed company securities for which interest recognition has been discontinued was $10,919,459, representing 1.7% of the Fund’s net assets. For information as to specific securities, see the accompanying Statement of Investments.

8. Restricted Securities

The Fund invests in securities that are restricted under the Securities Act of 1933 (1933 Act). Restricted securities are often purchased in private placement transactions, and cannot be sold without prior registration unless the sale is pursuant to an exemption under the 1933 Act. Disposal of these securities may require greater effort and expense, and prompt sale at an acceptable price may be difficult. The Fund may have registration rights for restricted securities. The issuer generally incurs all registration costs.


MGD-28		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

At June 30, 2018, investments in restricted securities, excluding securities exempt from registration under the 1933 Act deemed to be liquid, were as follows:


Principal Amount/ Shares	Issuer	Acquisition Date		Cost		Value
595	Broadband Ventures III LLC, secured promissory note, 5.00%, 2/01/12		7/01/10 - 11/30/12	$	595	$	—
424,073	International Automotive Components Group Brazil LLC		4/13/06 - 12/26/08		281,629		9,643
4,052,916	International Automotive Components Group North America LLC		1/12/06 - 3/18/13		3,247,714		1,213,398

	Total Restricted Securities (Value is 0.2% of Net Assets)			$	3,529,938	$	1,223,041

9. Other Derivative Information

At June 30, 2018, the Fund’s investments in derivative contracts are reflected in the Statement of Assets and Liabilities as follows:


	Asset Derivatives				Liability Derivatives
Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Assets and Liabilities Location	Fair Value			Statement of Assets and Liabilities Location	Fair Value
Foreign exchange contracts	Variation margin on futures contracts	$	604,513	^a	Variation margin on futures contracts	$	—
	Unrealized appreciation on OTC forward exchange contracts		452,870		Unrealized depreciation on OTC forward exchange contracts		216,536

Totals		$	1,057,383			$	216,536

^aThis amount reflects the cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only the variation margin receivable/ payable at period end is separately reported within the Statement of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.

For the period ended June 30, 2018, the effect of derivative contracts in the Fund’s Statement of Operations was as follows:


Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Location	Net Realized Gain (Loss) for the Period		Statement of Operations Location	Net Change in Unrealized Appreciation (Depreciation) for the Period
	Net realized gain (loss) from:			Net change in unrealized appreciation (depreciation) on:
Foreign exchange contracts	Forward exchange contracts	$	3,072,755	Forward exchange contracts	$	1,217,399
	Futures contracts		582,723	Futures contracts		1,305,791

Totals		$	3,655,478		$	2,523,190

For the period ended June 30, 2018, the average month end notional amount of futures contracts represented $51,905,207. The average month end contract value of forward exchange contracts was $133,864,413.

See Note 1(c) regarding derivative financial instruments.

10. Credit Facility


		Semiannual Report			MGD-29

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

10. Credit Facility (continued)

11. Fair Value Measurements

•

Level 1 – quoted prices in active markets for identical financial instruments

•

Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

•

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2018, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:


	Level 1		Level 2		Level 3			Total
Assets:
Investments in Securities:^a
Equity Investments:^b
Auto Components	$	2,001,813	$	—	$	1,223,041		$	3,224,854
Media		33,960,478		225,776		—			34,186,254
Software		29,276,929		23,953		—			29,300,882
All Other Equity Investments		497,918,079		—		—			497,918,079
Corporate Notes and Senior Floating Rate Interests		—		8,421,467		—			8,421,467
Corporate Notes and Senior Floating Rate Interests in Reorganization		—		10,919,459		—	^c		10,919,459
Companies in Liquidation		—		225,631		—	^c		225,631
Short Term Investments		25,878,571		15,800,000		—			41,678,571

Total Investments in Securities	$	589,035,870	$	35,616,286	$	1,223,041		$	625,875,197

Other Financial Instruments:
Futures Contracts	$	604,513	$	—	$	—		$	604,513
Forward Exchange Contracts		—		452,870		—			452,870

Total Other Financial Instruments	$	604,513	$	452,870	$	—		$	1,057,383


MGD-30		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)


	Level 1		Level 2		Level 3		Total
Liabilities:
Other Financial Instruments:
Securities Sold Short	$	3,479,801	$	—	$	—	$	3,479,801
Forward Exchange Contracts		—		216,536		—		216,536

Total Other Financial Instruments	$	3,479,801	$	216,536	$	—	$	3,696,337

^aFor detailed categories, see the accompanying Statement of Investments.

^bIncludes common and preferred stocks, management investment companies as well as other equity investments.

^cIncludes securities determined to have no value at June 30, 2018.

A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the beginning and/or end of the period. At June 30, 2018, the reconciliation of assets is as follows:


	Balance at Beginning of Period			Purchases		Sales			Transfer Into Level 3		Transfer Out of Level 3^a			Cost Basis Adjustments		Net Realized Gain (Loss)			Net Unrealized Appreciation (Depreciation)			Balance at End of Period			Net Change in Unrealized Appreciation (Depreciation) on Assets Held at Period End
Assets:
Investments in Securities:
Equity Investments:^b
Auto Components	$	2,684,499		$	—	$	—		$	—	$	—		$	—	$	—		$	(1,461,458	)	$	1,223,041		$	(1,461,458	)
Diversified Financial Services		4,224,121			—		(4,153,225	)		—		—			—		(1,276,775	)		1,205,879			—			—
Software		8,810			—		—			—		(19,836	)		—		—			11,026			—			—
Companies in Liquidation		136,964	^c		—		(1,162	)		—		(118,073	)		—		1,162			(18,891	)		—	^c		—

Total Investments in Securities	$	7,054,394		$	—	$	(4,154,387	)	$	—	$	(137,909	)	$	—	$	(1,275,613	)	$	(263,444	)	$	1,223,041		$	(1,461,458	)

^aThe investments were transferred out of Level 3 as a result of the availability of other significant observable valuation inputs. May include amounts related to a corporate action.

^bIncludes common stocks as well as other equity investments.

^cIncludes securities determined to have no value.

12. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations


Counterparty		Currency		Selected Portfolio

BOFA	Bank of America Corp.	EUR	Euro	ADR	American Depositary Receipt

BONY	The Bank of New York Mellon Corp.	GBP	British Pound	FHLB	Federal Home Loan Bank

HSBK	HSBC Bank PLC	USD	United States Dollar	LIBOR	London InterBank Offered Rate

SSBT	State Street Bank and Trust Co., N.A.			TRA	Tax Receivable Agreement Right

UBSW	UBS AG


		Semiannual Report		MGD-31

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Franklin Mutual Shares VIP Fund

This semiannual report for Franklin Mutual Shares VIP Fund covers the period ended June 30, 2018.

Class 1 Performance Summary as of June 30, 2018

The Fund’s Class 1 Shares had a -0.63% total return for the six-month period ended June 30, 2018.


		Semiannual Report			MS-1

FRANKLIN MUTUAL SHARES VIP FUND

Fund Goal and Main Investments

The Fund seeks capital appreciation, with income as a secondary goal, by investing primarily in equity securities of companies the Fund’s investment manager believes are available at market prices less than their intrinsic value. The equity securities in which the Fund invests are primarily common stock. To a lesser extent, the Fund also invests in merger arbitrage securities and the debt and equity of distressed companies. The Fund may invest up to 35% of its assets in foreign securities, which may include sovereign debt and participations in foreign debt.

Fund Risks

All investments involve risks, including possible loss of principal. Value securities may not increase in price as anticipated or may decline further in value. The Fund’s investments in foreign securities involve special risks including currency fluctuations, and economic and political uncertainties. Securities issued by smaller and midsize companies may be more volatile in price than those of larger companies, involve substantial risks and should be considered speculative. Derivatives involve costs and can create economic leverage in the Fund’s portfolio which may result in significant volatility and cause the Fund to participate in losses (as well as gains) in an amount that exceeds the Fund’s initial investment. The Fund may also invest in companies engaged in mergers, reorganizations or liquidations, which involve special risks as pending deals may not be completed on time or on favorable terms, as well as lower rated bonds, which entail higher credit risk. To the extent that the Fund focuses on particular countries, regions, industries, sectors or types of investment from time to time, the Fund may be subject to greater risks of adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Fund’s benchmark, the Standard & Poor’s^® 500 Index (S&P 500^®), posted a +2.65% total return for the period under review.¹

Geographic Composition*

Based on Total Net Assets as of 6/30/18

LOGO

*Figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

Economic and Market Overview

1. Source: Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).


MS-2		Semiannual Report

FRANKLIN MUTUAL SHARES VIP FUND


Top 10 Sectors/Industries
6/30/18
	% of Total Net Assets
Banks		10.1%
Oil, Gas & Consumable Fuels		8.8%
Pharmaceuticals		7.9%
Media		7.4%
Insurance		7.3%
Software		5.2%
Tobacco		3.6%
Health Care Equipment & Supplies		3.5%
Communications Equipment		3.2%
Food & Staples Retailing		2.7%

Investment Strategy


		Semiannual Report			MS-3

FRANKLIN MUTUAL SHARES VIP FUND

it is trading below the value we believe it would receive in a deal. In keeping with our commitment to a relatively conservative investment approach, we typically focus our arbitrage efforts on announced deals, and eschew rumored deals or other situations we consider relatively risky.

In addition, it is our practice to hedge the Fund’s currency exposure when we deem it advantageous for our shareholders.

What is meant by “hedge”?

To hedge an investment is to take a position intended to offset potential losses/gains that may be incurred by a companion financial instrument.

Manager’s Discussion

As investors entered 2018, overall US equity market valuations

Mergers and acquisitions (M&A) have remained active. In the first half of 2018, the market received some clarity regarding the regulatory environment when a federal judge ruled in favor of AT&T and Time Warner⁴, and against the US Department of Justice (DOJ) in its antitrust lawsuit. The judge decided that the DOJ had failed to show that the merger would be anticompetitive, and the deal closed promptly after the opinion was released. In response, the shares of companies involved in several other pending deals traded higher, indicating a higher expected probability of closing. The market also saw the development of a bidding war between The Walt Disney Company and Comcast for control of Twenty-First Century Fox and Sky. As the year began, Disney had a deal to buy Fox and Fox had an offer pending to acquire the 61% of Sky it did not own. Comcast subsequently launched bids for both companies, and when Fox raised its bid for Sky, Comcast promptly raised its bid to a higher level. Comcast has indicated it will not bid further for Fox and, while Fox could raise its bid for Sky, it appears most likely that Comcast will purchase Sky. This bidding war showed the ongoing uncertainty in media, in which major media firms believe they need even more scale to compete with internet rivals that are experiencing significant growth. We expect ongoing activity in M&A markets and, with the increased regulatory clarity provided by the Time Warner decision, further opportunities in merger arbitrage.

4. Not held at period-end.


MS-4		Semiannual Report

FRANKLIN MUTUAL SHARES VIP FUND

much of our focus on out-of-favor industries in pursuit of securities with the potential to benefit most from liquidity-enhancing events, such as asset sales, the ability to issue secured debt within existing agreements, and free-cash flow that could buy time for a company to weather its financial storm.

Turning to Fund performance, top positive contributors included US-based oil and gas exploration and production company Anadarko Petroleum, multinational software company Microsoft and global insurer XL Group.

Shares of Anadarko Petroleum were supported by rising crude oil prices, and continued disciplined capital allocation by management. Oil prices rose through the period, and in May 2018, Anadarko announced it would accelerate the completion of an existing $3 billion share buyback plan and consider further buybacks if the favorable operating environment persists and drives further increases in its free cash flow.

Microsoft continued to reap the rewards of its rapidly growing cloud computing business and its effort to move Microsoft Office software clients to its subscription-based services. In February and April 2018, Microsoft reported solid quarterly growth in revenues and earnings per share. The company also increased its operating margin estimate for 2018. We believe Microsoft’s cloud computing and subscription-based services can continue to grow at a strong pace, which may further lift its operating margin.

Shares of XL Group, a global insurance and reinsurance company, jumped in early March 2018 when it agreed to be acquired by French insurer AXA⁵. AXA has the ability to fully finance the acquisition from its current financial resources. In late March, the US Federal Trade Commission granted antitrust clearance and we believe other needed regulatory approvals are likely to be received.

During the period under review, Fund investments that detracted from performance included British American Tobacco, digital security and storage provider Symantec and US-based industrials company General Electric (GE).


Top 10 Holdings
6/30/18
Company *Sector/Industry, Country*	% of Total Net Assets
Medtronic PLC Health Care Equipment & Supplies, U.S.		3.5%
Merck & Co. Inc. Pharmaceuticals, U.S.		3.0%
Eli Lilly & Co. Pharmaceuticals, U.S.		2.9%
Cisco Systems Inc. Communications Equipment, U.S.		2.2%
British American Tobacco PLC Tobacco, U.K.		2.2%
Microsoft Corp. Software, U.S.		2.1%
American International Group Inc. Insurance, U.S.		2.1%
Novartis AG Pharmaceuticals, Switzerland		2.0%
The Walt Disney Co. Media, U.S.		2.0%
Wells Fargo & Co. Banks, U.S.		2.0%

levels in combustible cigarettes. The process may not result in regulation, but if it does, many experts believe the review could take seven to 10 years before a rule is adopted in the marketplace. Meanwhile, JUUL, produced by JUUL Labs⁵ has emerged as a popular e-cigarette in the US. JUUL’s growth rate is high and its product is popular with young consumers. It is unclear to what degree JUUL is cannibalizing the combustible market, but it has hurt investor sentiment toward the industry.

5. Not a Fund holding.


		Semiannual Report			MS-5

FRANKLIN MUTUAL SHARES VIP FUND

its health care division and divest its stake in oil-services firm Baker Hughes. Once completed, we believe the moves will streamline GE and enable the company to reduce debt and build up a cash buffer, as well as help management better focus on its key aviation, power and renewable energy divisions.

What is a currency forward?

A currency forward is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date.

What is a future?

A future is an agreement between the Fund and a counterparty made through a US or foreign futures exchange to buy or sell an underlying instrument or asset at a specific price on a future date.

Thank you for your participation in Franklin Mutual Shares VIP Fund. We look forward to serving your future investment needs.


MS-6		Semiannual Report

FRANKLIN MUTUAL SHARES VIP FUND

Class 1 Fund Expenses

Actual Fund Expenses

The table below provides information about the actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of ongoing Fund expenses but does not include the effect of ongoing Contract expenses, is used to calculate the “Ending Account Value.” You can estimate the Fund-level expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number under the headings “Actual” and “Fund-Level Expenses Paid During Period” (if Fund-Level Expenses Paid During Period were $ 7.50, then 8.6 × $7.50 = $64.50). In this illustration, the estimated expenses paid this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Actual
(actual return after expenses)

Hypothetical
(5% annual return before expenses)

Share Class

Beginning Account
Value 1/1/18

Ending Account
Value 6/30/18

Fund-Level Expenses
Paid During Period
1/1/18–6/30/18

^1,2

Ending Account
Value 6/30/18

Fund-Level Expenses
Paid During Period
1/1/18–6/30/18

^1,2

Net
Annualized
Expense
Ratio

Class 1

$1,000

$993.70

$3.56

$1,021.22

$3.61

0.72%

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above — in the far right column — multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include any ongoing expenses of the Contract for which the Fund is an investment option or acquired fund fees and expenses.


		Semiannual Report			MS-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Mutual Shares VIP Fund


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 1
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$20.71			$20.40			$19.48			$22.91			$21.92			$17.45


Income from investment operations^a:

Net investment income^b		0.20			0.49			0.50			0.44			0.62^c			0.42

Net realized and unrealized gains (losses)		(0.33	)		1.22			2.56			(1.54	)		1.01			4.52

Total from investment operations		(0.13	)		1.71			3.06			(1.10	)		1.63			4.94


Less distributions from:

Net investment income		—			(0.53	)		(0.46	)		(0.77	)		(0.52	)		(0.47	)

Net realized gains		—			(0.87	)		(1.68	)		(1.56	)		(0.12	)		—

Total distributions		—			(1.40	)		(2.14	)		(2.33	)		(0.64	)		(0.47	)

Net asset value, end of period		$20.58			$20.71			$20.40			$19.48			$22.91			$21.92


Total return^d		(0.63)%			8.64%			16.35%			(4.69)%			7.38%			28.53%

Ratios to average net assets^e

Expenses^f,g		0.72%	^h		0.72%	^h		0.72%^h			0.73%	^h		0.73%			0.71%

Expenses incurred in connection with securities sold short		0.01%			—%			0.01%			0.02%			0.03%			—%	ⁱ

Net investment income		1.93%			2.34%			2.57%			2.00%			2.83%	^c		2.08%

Supplemental data

Net assets, end of period (000’s)		$614,055			$653,700			$610,395			$643,438			$656,463			$552,163

Portfolio turnover rate		11.15%			18.32%			24.45%			19.88%			21.33%			24.05%

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.23 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.79%.

^eRatios are annualized for periods less than one year.

^gBenefit of expense reduction rounds to less than 0.01%.

^hBenefit of waiver and payments by affiliates rounds to less than 0.01%.

ⁱRounds to less than 0.01%.


MS-8		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Mutual Shares VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 2
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$20.36			$20.08			$19.20			$22.60			$21.63			$17.23


Income from investment operations^a:

Net investment income^b		0.17			0.43			0.45			0.38			0.58	^c		0.36

Net realized and unrealized gains (losses)		(0.31	)		1.20			2.52			(1.51	)		0.97			4.46

Total from investment operations		(0.14	)		1.63			2.97			(1.13	)		1.55			4.82


Less distributions from:

Net investment income		—			(0.48	)		(0.41	)		(0.71	)		(0.46	)		(0.42	)

Net realized gains		—			(0.87	)		(1.68	)		(1.56	)		(0.12	)		—

Total distributions		—			(1.35	)		(2.09	)		(2.27	)		(0.58	)		(0.42	)

Net asset value, end of period		$20.22			$20.36			$20.08			$19.20			$22.60			$21.63


Total return^d		(0.69)%			8.35%			16.06%			(4.94)%			7.12%			28.26%

Ratios to average net assets^e

Expenses^f,g		0.97%	^h		0.97%	^h		0.97%	^h		0.98%	^h		0.98%			0.96%

Expenses incurred in connection with securities sold short		0.01%			—%			0.01%			0.02%			0.03%			—%	ⁱ

Net investment income		1.68%			2.09%			2.32%			1.75%			2.58%^c			1.83%

Supplemental data

Net assets, end of period (000’s)		$3,185,852			$3,476,913			$3,621,358			$3,353,505			$4,218,342			$4,558,547

Portfolio turnover rate		11.15%			18.32%			24.45%			19.88%			21.33%			24.05%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and

repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.23 per share related to income received in the form of special dividends in connection with certain Fund

holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.54%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which Franklin Templeton Variable Insurance

Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the

periods presented. See Note 1(d).

^gBenefit of expense reduction rounds to less than 0.01%.

^hBenefit of waiver and payments by affiliates rounds to less than 0.01%.

ⁱRounds to less than 0.01%.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			MS-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Mutual Shares VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 4
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$20.53			$20.23			$19.32			$22.72			$21.74			$17.31


Income from investment operations^a:

Net investment income^b		0.16			0.41			0.44			0.36			0.57	^c		0.34

Net realized and unrealized gains (losses)		(0.32	)		1.21			2.53			(1.52	)		0.96			4.49

Total from investment operations		(0.16	)		1.62			2.97			(1.16	)		1.53			4.83


Less distributions from:

Net investment income		—			(0.45	)		(0.38	)		(0.68	)		(0.43	)		(0.40	)

Net realized gains		—			(0.87	)		(1.68	)		(1.56	)		(0.12	)		—

Total distributions		—			(1.32	)		(2.06	)		(2.24	)		(0.55	)		(0.40	)

Net asset value, end of period		$20.37			$20.53			$20.23			$19.32			$22.72			$21.74


Total return^d		(0.78)%			8.25%			15.94%			(5.05)%			7.04%			28.05%

Ratios to average net assets^e

Expenses^f,g		1.07%	^h		1.07%	^h		1.07%	^h		1.08%	^h		1.08%			1.06%

Expenses incurred in connection with securities sold short		0.01%			—%			0.01%			0.02%			0.03%			—%	ⁱ

Net investment income		1.58%			1.99%			2.22%			1.65%			2.48%^c			1.73%

Supplemental data

Net assets, end of period (000’s)		$119,681			$122,942			$122,476			$130,978			$158,020			$188,153

Portfolio turnover rate		11.15%			18.32%			24.45%			19.88%			21.33%			24.05%

^bBased on average daily shares outstanding.

^eRatios are annualized for periods less than one year.

^gBenefit of expense reduction rounds to less than 0.01%.

^hBenefit of waiver and payments by affiliates rounds to less than 0.01%.

ⁱRounds to less than 0.01%.


MS-10		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2018 (unaudited)


Franklin Mutual Shares VIP Fund
		Country		Shares/ Units/ Warrants		Value
	Common Stocks and Other Equity Interests 88.7%
	Aerospace & Defense 0.9%
	BAE Systems PLC		United Kingdom		4,337,775	$	37,051,714

	Auto Components 0.5%
	The Goodyear Tire & Rubber Co.		United States		632,638		14,734,139
a,b,c	International Automotive Components Group Brazil LLC		Brazil		1,730,515		39,348
a,b,c	International Automotive Components Group North America LLC		United States		15,382,424		4,605,329

							19,378,816

	Automobiles 1.2%
	General Motors Co.		United States		1,190,330		46,899,002
	Banks 10.1%
	Barclays PLC		United Kingdom		10,570,083		26,382,228
	CIT Group Inc.		United States		719,826		36,286,429
	Citigroup Inc.		United States		921,219		61,647,976
	Citizens Financial Group Inc.		United States		1,837,966		71,496,877
a	FCB Financial Holdings Inc., A		United States		493,723		29,030,912
	Guaranty Bancorp		United States		209,583		6,245,573
	JPMorgan Chase & Co.		United States		708,720		73,848,624
	State Bank Financial Corp.		United States		352,200		11,763,480
	Wells Fargo & Co.		United States		1,389,860		77,053,839

							393,755,938

	Beverages 0.9%
	PepsiCo Inc.		United States		319,942		34,832,086

	Building Products 0.9%
	Johnson Controls International PLC		United States		1,010,400		33,797,880

	Chemicals 0.0%
a,b,d	Dow Corning Corp., Contingent Distribution		United States		100,000		—

	Communications Equipment 3.2%
	Cisco Systems Inc.		United States		2,009,580		86,472,227
	Nokia OYJ, A		Finland		3,254,727		18,747,115
	Nokia OYJ, ADR		Finland		3,621,945		20,826,184

							126,045,526

	Construction & Engineering 0.8%
	Fluor Corp.		United States		627,182		30,593,938

	Construction Materials 0.6%
	LafargeHolcim Ltd., B		Switzerland		510,642		24,944,326

	Consumer Finance 1.6%
	Ally Financial Inc		United States		763,354		20,053,310
	Capital One Financial Corp.		United States		471,385		43,320,281

							63,373,591

	Containers & Packaging 1.6%
	International Paper Co.		United States		878,375		45,745,770
	WestRock Co.		United States		325,371		18,552,654

							64,298,424

	Diversified Financial Services 1.1%
	Voya Financial Inc.		United States		903,710		42,474,370


		Semiannual Report			MS-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)


		Country		Shares/ Units/ Warrants		Value
	Common Stocks and Other Equity Interests (continued)
	Diversified Telecommunication Services 1.7%
	AT&T Inc.		United States		1,300,478	$	41,758,349
	Koninklijke KPN NV		Netherlands		8,368,425		22,780,991

							64,539,340

	Electric Utilities 0.6%
	PG&E Corp.		United States		502,843		21,400,998

	Electrical Equipment 1.3%
a	Sensata Technologies Holding PLC		United States		1,105,630		52,605,875

	Energy Equipment & Services 1.2%
	Baker Hughes a GE Co., A		United States		995,385		32,877,567
a	GulfMark Offshore Inc.		United States		131		4,388
a	GulfMark Offshore Inc., wts., 11/14/24		United States		1,412		3,135
a	McDermott International Inc.		United States		699,157		13,738,435

							46,623,525

	Equity Real Estate Investment Trusts (REITs) 1.6%
	Alexander’s Inc.		United States		40,126		15,353,412
	JBG SMITH Properties		United States		152,305		5,554,563
	Vornado Realty Trust		United States		552,996		40,877,464

							61,785,439

	Food & Staples Retailing 2.7%
	The Kroger Co.		United States		2,244,460		63,854,887
a	Rite Aid Corp.		United States		2,439,970		4,221,148
	Walgreens Boots Alliance Inc.		United States		629,558		37,782,923

							105,858,958

	Health Care Equipment & Supplies 3.5%
	Medtronic PLC		United States		1,595,552		136,595,207

	Health Care Providers & Services 1.4%
	CVS Health Corp.		United States		823,961		53,021,890

	Household Durables 0.2%
	Toll Brothers Inc.		United States		205,449		7,599,559

	Household Products 0.8%
	Energizer Holdings Inc.		United States		494,900		31,158,904

	Independent Power & Renewable Electricity Producers 0.8%
a	Vistra Energy Corp.		United States		1,388,895		32,861,256

	Industrial Conglomerates 1.9%
	General Electric Co.		United States		5,597,400		76,180,614

	Insurance 7.3%
	Alleghany Corp.		United States		102,188		58,755,034
	American International Group Inc.		United States		1,552,096		82,292,130
a	Brighthouse Financial Inc.		United States		434,800		17,422,436
	Chubb Ltd.		United States		319,945		40,639,414
	The Hartford Financial Services Group Inc.		United States		622,878		31,847,752
	MetLife Inc.		United States		977,503		42,619,131
	XL Group Ltd.		Bermuda		224,612		12,567,042

							286,142,939

	IT Services 1.6%
	Cognizant Technology Solutions Corp., A.		United States		801,770		63,331,812


MS-12		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)


		Country		Shares/ Units/ Warrants		Value
	Common Stocks and Other Equity Interests (continued)
	Machinery 0.7%
	CNH Industrial NV.		United Kingdom		860,940	$	9,149,478
	CNH Industrial NV, special voting		United Kingdom		1,844,814		19,605,413

							28,754,891

	Media 7.4%
a	Charter Communications Inc., A		United States		238,113		69,817,113
	Comcast Corp., A		United States		1,384,300		45,418,883
a	Cumulus Media Inc., A.		United States		60,894		913,410
a	Cumulus Media Inc., B.		United States		90,790		1,429,942
a	DISH Network Corp., A		United States		778,183		26,154,731
	Sky PLC.		United Kingdom		2,470,415		47,680,413
	Twenty-First Century Fox Inc., B		United States		422,700		20,826,429
	The Walt Disney Co.		United States		741,600		77,727,096

							289,968,017

	Metals & Mining 0.8%
	thyssenkrupp AG		Germany		1,071,230		26,057,720
	Warrior Met Coal Inc		United States		248,815		6,859,830

							32,917,550

	Oil, Gas & Consumable Fuels 8.8%
	Anadarko Petroleum Corp.		United States		948,307		69,463,488
	BP PLC		United Kingdom		3,759,822		28,713,871
	Kinder Morgan Inc.		United States		3,152,140		55,698,314
	Marathon Oil Corp.		United States		2,143,163		44,706,380
	Plains All American Pipeline LP		United States		1,058,500		25,022,940
	Royal Dutch Shell PLC, A (EUR Traded)		United Kingdom		1,247,949		43,405,887
	Royal Dutch Shell PLC, A (GBP Traded)		United Kingdom		927,720		32,209,114
	The Williams Cos. Inc.		United States		1,746,498		47,347,561

							346,567,555

	Pharmaceuticals 7.9%
	Eli Lilly & Co.		United States		1,358,736		115,940,943
	Merck & Co. Inc.		United States		1,910,248		115,952,053
	Novartis AG, ADR		Switzerland		1,040,581		78,605,489

							310,498,485

	Professional Services 0.5%
	RELX PLC		United Kingdom		852,110		18,257,934
	Software 5.2%
a	Avaya Holdings Corp., wts., 12/15/22.		United States		91,551		423,423
	CA Inc.		United States		1,371,332		48,887,986
a	Dell Technologies Inc., V		United States		198,331		16,774,836
	Microsoft Corp.		United States		854,447		84,257,019
	Symantec Corp.		United States		2,600,061		53,691,259

							204,034,523

	Technology Hardware, Storage & Peripherals 2.3%
	Hewlett Packard Enterprise Co.		United States		1,956,667		28,586,905
	Samsung Electronics Co. Ltd.		South Korea		1,502,417		62,836,429

							91,423,334


		Semiannual Report			MS-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)


		Country		Shares/ Units/ Warrants		Value
	Common Stocks and Other Equity Interests (continued)
	Tobacco 3.6%
	Altria Group Inc.		United States		644,688	$	36,611,831
	British American Tobacco PLC		United Kingdom		1,237,742		62,603,725
	British American Tobacco PLC, ADR		United Kingdom		446,833		22,542,725
	Imperial Brands PLC		United Kingdom		487,268		18,159,177

							139,917,458

	Wireless Telecommunication Services 1.5%
a	T-Mobile U.S. Inc.		United States		660,900		39,488,775
	Vodafone Group PLC		United Kingdom		7,562,549		18,358,290

							57,847,065


	Total Common Stocks and Other Equity Interests (Cost $2,716,554,581)						3,477,338,739

	Management Investment Companies (Cost $21,403,790) 0.6%
	Diversified Financial Services 0.6%
a	Altaba Inc.		United States		326,600		23,910,386


				Principal Amount
	Corporate Notes and Senior Floating Rate Interests 1.8%
e,f	Cumulus Media New Holdings Inc., Term Loan, 6.60%, (1-month USD LIBOR + 4.50%), 5/13/22		United States	$	11,807,753		11,756,094
	Frontier Communications Corp.,
	senior note, 10.50%, 9/15/22		United States		22,633,000		20,652,613
	senior note, 11.00%, 9/15/25		United States		25,535,000		20,548,015
g	McDermott Technology Americas Inc., senior note, 144A, 10.625%, 5/01/24		United States		9,797,000		10,237,865
e,f	Toys R US-Delaware Inc., (DIP), 14.75%, (Prime + 9.75%), 1/18/19		United States		9,147,026		9,267,080


	Total Corporate Notes and Senior Floating Rate Interests (Cost $73,927,696)						72,461,667


	Corporate Notes and Senior Floating Rate Interests in Reorganization 1.7%
b,c,h	Broadband Ventures III LLC, secured promissory note, 5.00%, 2/01/12		United States		1,754		—
h i	HeartCommunications Inc., senior secured note, first lien, 9.00%, 12/15/19		United States		26,449,000		20,167,362
	^e,f Tranche D Term Loan, 8.443%, (3-month USD LIBOR + 6.75%), 1/30/19		United States		34,746,619		26,594,194
	^e,f Tranche E Term Loan, 9.193%, (3-month USD LIBOR + 7.50%), 7/30/19		United States		11,168,253		8,544,998
e,f,h	Toys R US-Delaware Inc., Term B-4 Loan, 10.067%, (1-month USD LIBOR + 8.75%), 4/24/20		United States		21,079,272		10,690,142


	Total Corporate Notes and Senior Floating Rate Interests in Reorganization (Cost $91,131,705)						65,996,696


				Shares
	Companies in Liquidation 0.1%
a,b,d	Avaya Holdings Corp., Contingent Distribution		United States		30,319,000		—
a,b,d	Avaya Inc., Contingent Distribution		United States		34,518,267		—
a,b,d	Tribune Media, Litigation Trust, Contingent Distribution		United States		398,423		—
a,d	Vistra Energy Corp., Litigation Trust, Contingent Distribution		United States		129,926,406		1,055,652


MS-14		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)


		Country		Shares		Value
	Companies in Liquidation (continued)
a	Vistra Energy Corp., Litigation Trust, TRA		United States		2,184,095	$	1,419,662

	Total Companies in Liquidation (Cost $13,274,471)						2,475,314

	Total Investments before Short Term Investments (Cost $2,916,292,243)						3,642,182,802


				Principal Amount
	Short Term Investments 6.8%
	U.S. Government and Agency Securities 6.8%
i	FHLB, 7/02/18		United States	$	69,600,000		69,600,000
i	U.S. Treasury Bill, ^j8/09/18		United States		21,000,000		20,959,629
	7/05/18 - 12/27/18		United States		176,500,000		175,530,871

	Total U.S. Government and Agency Securities (Cost $266,055,744)						266,090,500


	Total Investments (Cost $3,182,347,987) 99.7%						3,908,273,302
	Securities Sold Short (0.6)%						(21,813,875	)
	Other Assets, less Liabilities 0.9%						33,128,565

	Net Assets 100.0%					$	3,919,587,992


				Shares
k	Securities Sold Short (Proceeds $20,636,585) (0.6)%
	Common Stocks (0.6)%
	Internet Software & Services (0.6)%
	Alibaba Group Holding Ltd., ADR		China		117,576		(21,813,875	)

^aNon-income producing.

^bFair valued using significant unobservable inputs. See Note 12 regarding fair value measurements.

^cSee Note 8 regarding restricted securities.

^dContingent distributions represent the right to receive additional distributions, if any, during the reorganization of the underlying company. Shares represent total underlying principal of debt securities.

^eThe coupon rate shown represents the rate at period end.

^fSee Note 1(f) regarding senior floating rate interests.

^gSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2018, the value of this security was $10,237,865, representing 0.3% of net assets.

^hSee Note 7 regarding credit risk and defaulted securities.

ⁱThe security was issued on a discount basis with no stated coupon rate.

^jA portion or all of the security has been segregated as collateral for securities sold short. At June 30, 2018, the value of this security pledged amounted to $10,809,185, representing 0.3% of net assets.

^kSee Note 1(d) regarding securities sold short.


		Semiannual Report			MS-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

At June 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(c).

Futures Contracts


Description	Type		Number of Contracts		Notional Amount*		Expiration Date		Value/ Unrealized Appreciation (Depreciation)
Currency Contracts
EUR/USD		Short		468	$	68,658,525		9/17/18	$	715,096
GBP/USD		Short		1,341		110,934,225		9/17/18		1,689,841

Total Futures Contracts									$	2,404,937

*As of period end.

At June 30, 2018, the Fund had the following forward exchange contracts outstanding. See Note 1(c).

Forward Exchange Contracts


Currency	Counterparty	^a	Type	Quantity		Contract Amount	Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts
South Korean Won	HSBK		Buy	5,681,720,417	$	5,212,729	7/13/18	$	—	$	(116,923	)
South Korean Won	HSBK		Sell	51,514,745,353		47,709,882	7/13/18		1,507,488		—
South Korean Won	UBSW		Sell	24,780,574,064		22,971,883	7/13/18		746,754		—
British Pound	HSBK		Sell	70,555,504		93,678,306	8/14/18		303,944		—
Euro	BOFA		Buy	1,803,601		2,101,371	8/20/18		14,296		—
Euro	BONY		Buy	588,855		689,379	8/20/18		1,363		—
Euro	HSBK		Buy	3,126,626		3,644,193	8/20/18		23,417		—
Euro	SSBT		Buy	588,855		688,674	8/20/18		2,067		—
Euro	UBSW		Buy	588,855		688,670	8/20/18		2,072		—
Euro	UBSW		Sell	79,754,816		93,309,945	8/20/18		—		(244,428	)

Total Forward Exchange Contracts								$	2,601,401	$	(361,351	)

Net unrealized appreciation (depreciation)								$	2,240,050

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

See Note 9 regarding other derivative information.

See Abbreviations on page MS-30.


MS-16		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2018 (unaudited)


	Franklin Mutual Shares VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	3,182,347,987

Value - Unaffiliated issuers	$	3,908,273,302
Cash		3,508,406
Foreign currency, at value (cost $2,184,216)		2,204,112
Receivables:
Investment securities sold		5,374,636
Capital shares sold		16,756
Dividends and interest		7,957,429
European Union tax reclaims		1,264,467
Deposits with brokers for:
Securities sold short		22,624,902
Futures contracts		3,660,390
Unrealized appreciation on OTC forward exchange contracts		2,601,401
Other assets		2,809

Total assets		3,957,488,610

Liabilities:
Payables:
Investment securities purchased		7,489,949
Capital shares redeemed		2,371,859
Management fees		2,210,191
Distribution fees		1,425,325
Variation margin on futures contracts		1,691,944
Securities sold short, at value (proceeds $20,636,585)		21,813,875
Unrealized depreciation on OTC forward exchange contracts		361,351
Accrued expenses and other liabilities		536,124

Total liabilities		37,900,618

Net assets, at value	$	3,919,587,992

Net assets consist of:
Paid-in capital	$	2,727,815,944
Undistributed net investment income		124,314,287
Net unrealized appreciation (depreciation)		729,336,757
Accumulated net realized gain (loss)		338,121,004

Net assets, at value	$	3,919,587,992


Class 1:
Net assets, at value	$	614,055,240

Shares outstanding		29,832,982

Net asset value and maximum offering price per share	$	20.58


Class 2:
Net assets, at value	$	3,185,851,962

Shares outstanding		157,594,423

Net asset value and maximum offering price per share	$	20.22


Class 4:
Net assets, at value	$	119,680,790

Shares outstanding		5,874,279

Net asset value and maximum offering price per share	$	20.37


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			MS-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2018 (unaudited)


	Franklin Mutual Shares VIP Fund
Investment income:
Dividends: (net of foreign taxes)*
Unaffiliated issuers	$	46,531,264
Interest:
Unaffiliated issuers		7,063,580
Income from securities loaned (net of fees and rebates)		14,429

Total investment income		53,609,273

Expenses:
Management fees (Note 3a)		13,861,673
Distribution fees: (Note 3c)
Class 2		4,120,868
Class 4		211,896
Custodian fees (Note 4)		55,599
Reports to shareholders		248,751
Professional fees		132,210
Trustees’ fees and expenses		10,712
Dividends on securities sold short		150,874
Other		49,667

Total expenses		18,842,250
Expense reductions (Note 4)		(11,337	)
Expenses waived/paid by affiliates (Note 3e)		(4,644	)

Net expenses		18,826,269

Net investment income		34,783,004

Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		196,562,827
Non-controlled affiliates (Note 3e and 10)		4,122
Foreign currency transactions		31,402
Forward exchange contracts		1,476,562
Futures contracts		2,160,136
Securities sold short		844,435

Net realized gain (loss)		201,079,484

Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(279,785,900	)
Translation of other assets and liabilities denominated in foreign currencies		(123,507	)
Forward exchange contracts		8,063,810
Futures contracts		4,500,335
Securities sold short		(1,440,210	)

Net change in unrealized appreciation (depreciation)		(268,785,472	)

Net realized and unrealized gain (loss)		(67,705,988	)

Net increase (decrease) in net assets resulting from operations	$	(32,922,984	)

*Foreign taxes withheld on dividends	$	1,417,956


MS-18		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets


	Franklin Mutual Shares VIP Fund
	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	34,783,004		$	91,754,971
Net realized gain (loss)		201,079,484			170,010,315
Net change in unrealized appreciation (depreciation)		(268,785,472	)		86,743,730

Net increase (decrease) in net assets resulting from operations		(32,922,984	)		348,509,016

Distributions to shareholders from:
Net investment income:
Class 1		—			(15,730,869	)
Class 2		—			(79,241,750	)
Class 4		—			(2,544,123	)
Net realized gains:
Class 1		—			(25,751,420	)
Class 2		—			(143,703,429	)
Class 4		—			(4,873,893	)

Total distributions to shareholders		—			(271,845,484	)

Capital share transactions: (Note 2)
Class 1		(36,115,631	)		32,173,830
Class 2		(262,521,274	)		(207,728,869	)
Class 4		(2,407,806	)		(1,780,903	)

Total capital share transactions		(301,044,711	)		(177,335,942	)

Net increase (decrease) in net assets		(333,967,695	)		(100,672,410	)
Net assets:
Beginning of period		4,253,555,687			4,354,228,097

End of period	$	3,919,587,992		$	4,253,555,687

Undistributed net investment income included in net assets:
End of period	$	124,314,287		$	89,531,283


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			MS-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Mutual Shares VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eighteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Mutual Shares VIP Fund (Fund) is included in this report. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers three classes of shares: Class 1, Class 2 and Class 4. Each class of shares may differ by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Investments in open-end mutual funds are valued at the closing NAV.


MS-20		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

b. Foreign Currency Translation

into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

c. Derivative Financial Instruments


		Semiannual Report			MS-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

c. Derivative Financial Instruments (continued)

by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement.

Collateral requirements differ by type of derivative. Collateral or initial margin requirements are set by the broker or exchange clearing house for exchange traded and centrally cleared derivatives. Initial margin deposited is held at the exchange and can be in the form of cash and/or securities. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the Fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of Fund business each day and any additional collateral required due to changes in derivative values may be delivered by the Fund or the counterparty the next business day, or within a few business days. Collateral pledged and/or received by the Fund for OTC derivatives, if any, is held in segregated accounts with the Fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives. To the extent that the amounts due to the Fund from its counterparties are not subject to collateralization or are not fully collateralized, the Fund bears the risk of loss from counterparty non-performance.

At June 30, 2018, the Fund received $3,519,810 in U.K. Treasury Bonds and U.S. Treasury Bills and Bonds as collateral for derivatives.

See Note 9 regarding other derivative information.

d. Securities Sold Short

e. Securities Lending

The Fund participates in an agency based securities lending program to earn additional income. The Fund receives cash collateral against the loaned securities in an amount equal to at


MS-22		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

f. Senior Floating Rate Interests

g. Income and Deferred Taxes

tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply, the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

h. Security Transactions, Investment Income, Expenses and Distributions


		Semiannual Report			MS-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

h. Security Transactions, Investment Income, Expenses and Distributions (continued)

certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

i. Accounting Estimates

j. Guarantees and Indemnifications

2. Shares of Beneficial Interest

At June 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 1 Shares:
Shares sold		421,128		$	8,739,546			2,282,225		$	47,514,985
Shares issued in reinvestment of distributions		—			—			2,083,490			41,482,289
Shares redeemed		(2,155,181	)		(44,855,177	)		(2,721,619	)		(56,823,444	)

Net increase (decrease)		(1,734,053	)	$	(36,115,631	)		1,644,096		$	32,173,830


Class 2 Shares:
Shares sold		11,505,416		$	233,591,936			5,279,163		$	107,845,830
Shares issued in reinvestment of distributions		—			—			11,374,754			222,945,179
Shares redeemed		(24,650,824	)		(496,113,210	)		(26,252,304	)		(538,519,878	)

Net increase (decrease)		(13,145,408	)	$	(262,521,274	)		(9,598,387	)	$	(207,728,869	)


MS-24		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount
Class 4 Shares:
Shares sold		376,941		$	7,706,111			730,910		$	15,136,184
Shares issued in reinvestment of distributions		—			—			375,216			7,418,016
Shares redeemed		(490,108	)		(10,113,917	)		(1,172,050	)		(24,335,103	)

Net increase (decrease)		(113,167	)	$	(2,407,806	)		(65,924	)	$	(1,780,903	)

3. Transactions with Affiliates


Subsidiary		Affiliation
Franklin Mutual Advisers, LLC (Franklin Mutual)		Investment manager
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent

a. Management Fees

Effective May 1, 2018, the Fund pays an investment management fee to Franklin Mutual based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
0.675%		Up to and including $5 billion
0.645%		Over $5 billion, up to and including $10 billion
0.625%		Over $10 billion, up to and including $15 billion
0.595%		Over $15 billion, up to and including $20 billion
0.585%		Over $20 billion, up to and including $25 billion
0.565%		Over $25 billion, up to and including $30 billion
0.555%		Over $30 billion, up to and including $35 billion
0.545%		In excess of $35 billion

Prior to May 1, 2018, the Fund paid fees to Franklin Mutual based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
0.750%		Up to and including $200 million
0.735%		Over $200 million, up to and including $700 million
0.700%		Over $700 million, up to and including $1.2 billion
0.675%		Over $1.2 billion, up to and including $5 billion
0.645%		Over $5 billion, up to and including $10 billion
0.625%		Over $10 billion, up to and including $15 billion
0.605%		Over $15 billion, up to and including $20 billion
0.585%		In excess of $20 billion


		Semiannual Report		MS-25

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

3. Transactions with Affiliates (continued)

a. Management Fees (continued)

For the period ended June 30, 2018, the annualized gross effective investment management fee rate was 0.685% of the Fund’s average daily net assets.

b. Administrative Fees

c. Distribution Fees

d. Transfer Agent Fees

Investor Services, under terms of an agreement, performs shareholder servicing for the Fund and is not paid by the Fund for the services.

e. Investments in Affiliated Management Investment Companies


	Number of Shares Held at Beginning of Period		Gross Additions		Gross Reductions			Number of Shares Held at End of Period		Value at End of Period		Dividend Income		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 1.51%		—		83,705,000		(83,705,000	)		—		$ —		$ —		$ —		$ —

f. Other Affiliated Transactions

At June 30, 2018, Franklin Templeton Variable Insurance Products Trust – Franklin Founding Funds Allocation VIP Fund owned 7.7% of the Fund’s outstanding shares.

4. Expense Offset Arrangement


MS-26		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

5. Income Taxes

At June 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


Cost of investments.	$	3,171,242,036

Unrealized appreciation	$	1,018,725,516
Unrealized depreciation		(298,856,785	)

Net unrealized appreciation (depreciation)	$	719,868,731

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of foreign currency transactions, defaulted securities and wash sales.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities and securities sold short) for the period ended June 30, 2018, aggregated $426,653,941 and $698,211,193, respectively.

7. Credit Risk and Defaulted Securities

At June 30, 2018, the aggregate long value of distressed company securities for which interest recognition has been discontinued was $65,996,696, representing 1.7% of the Fund’s net assets. For information as to specific securities, see the accompanying Statement of Investments.

8. Restricted Securities

At June 30, 2018, investments in restricted securities, excluding securities exempt from registration under the 1933 Act deemed to be liquid, were as follows:


Principal Amount/ Shares	Issuer	Acquisition Date		Cost		Value
1,754	Broadband Ventures III LLC, secured promissory note, 5.00%, 2/01/12		7/01/10 - 11/30/12	$	1,754	$	—
1,730,515	International Automotive Components Group Brazil LLC		4/13/06 - 12/26/08		1,149,241		39,348
15,382,424	International Automotive Components Group North America LLC		1/12/06 - 3/18/13		12,591,586		4,605,329

	Total Restricted Securities (Value is 0.1% of Net Assets)			$	13,742,581	$	4,644,677


		Semiannual Report			MS-27

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

9. Other Derivative Information

At June 30, 2018, the Fund’s investments in derivative contracts are reflected in the Statement of Assets and Liabilities as follows:


	Asset Derivatives				Liability Derivatives
Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Assets and Liabilities Location	Fair Value			Statement of Assets and Liabilities Location	Fair Value
Foreign exchange contracts	Variation margin on futures contracts	$	2,404,937	^a	Variation margin on futures contracts	$	—
	Unrealized appreciation on OTC forward exchange contracts		2,601,401		Unrealized depreciation on OTC forward exchange contracts		361,351

Totals		$	5,006,338			$	361,351

For the period ended June 30, 2018, the effect of derivative contracts in the Fund’s Statement of Operations was as follows:

Derivative Contracts
Not Accounted for
as Hedging Instruments

Statement of
Operations Location

Net Realized
Gain (Loss) for
the Period

Statement of
Operations Location

Net Change in
Unrealized
Appreciation
(Depreciation)
for the Period

Net realized gain (loss) from:

Net change in unrealized appreciation (depreciation) on:

Foreign exchange contracts

Forward exchange contracts

$1,476,562

Forward exchange contracts

$8,063,810

Futures contracts

2,160,136

Futures contracts

4,500,335

Totals

$3,636,698

$12,564,145

For the period ended June 30, 2018, the average month end notional amount of futures contracts represented $186,880,411. The average month end contract value of forward exchange contracts was $324,904,609.

See Note 1(c) regarding derivative financial instruments.

10. Holdings of 5% Voting Securities of Portfolio Companies

The 1940 Act defines “affiliated companies” to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting securities. During the period ended June 30, 2018, investments in “affiliated companies” were as follows:


Name of Issuer	Number of Shares Held at Beginning of Period		Gross Additions		Gross Reductions			Number of Shares Held at End of Period		Value at End of Period		Dividend Income		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)
Non-Controlled Affiliates
CB FIM Coinvestors LLC		6,400,507		—		(6,400,507	)^a		—	$	—	$	—	$	4,122	$	—

^aGross reduction was the result of a corporate action.

11. Credit Facility


MS-28		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

12. Fair Value Measurements

•

Level 1 – quoted prices in active markets for identical financial instruments

•

Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

•

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2018, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:


	Level 1		Level 2		Level 3			Total
Assets:
Investments in Securities:^a
Equity Investments:^b
Auto Components	$	14,734,139	$	—	$	4,644,677		$	19,378,816
Machinery		9,149,478		19,605,413		—			28,754,891
Media		288,538,075		1,429,942		—			289,968,017
Software		203,611,100		423,423		—			204,034,523
All Other Equity Investments		2,959,112,878		—		—	^c		2,959,112,878
Corporate Notes and Senior Floating Rate Interests		—		72,461,667		—			72,461,667
Corporate Notes and Senior Floating Rate Interests in Reorganization		—		65,996,696		—	^c		65,996,696
Companies in Liquidation		—		2,475,314		—	^c		2,475,314
Short Term Investments		196,490,500		69,600,000		—			266,090,500

Total Investments in Securities	$	3,671,636,170	$	231,992,455	$	4,644,677		$	3,908,273,302

Other Financial Instruments:
Futures Contracts	$	2,404,937	$	—	$	—		$	2,404,937
Forward Exchange Contracts		—		2,601,401		—			2,601,401

Total Other Financial Instruments	$	2,404,937	$	2,601,401	$	—		$	5,006,338


		Semiannual Report			MS-29

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

12. Fair Value Measurements (continued)


	Level 1		Level 2		Level 3		Total

Liabilities:
Other Financial Instruments:
Securities Sold Short	$	21,813,875	$	—	$	—	$	21,813,875
Forward Exchange Contracts		—		361,351		—		361,351

Total Other Financial Instruments	$	21,813,875	$	361,351	$	—	$	22,175,226

^aFor detailed categories, see the accompanying Statement of Investments.

^bIncludes common stocks, management investment companies as well as other equity investments.

^cIncludes securities determined to have no value at June 30, 2018.

A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the beginning and/or end of the period.

13. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations


Counterparty		Currency		Selected Portfolio

BOFA	Bank of America Corp.	EUR	Euro	ADR	American Depositary Receipt

BONY	The Bank of New York Mellon Corp.	GBP	British Pound	DIP	Debtor-In-Possession

HSBK	HSBC Bank PLC	USD	United States Dollar	FHLB	Federal Home Loan Bank

SSBT	State Street Bank and Trust Co., N.A.			LIBOR	London InterBank Offered Rate

UBSW	UBS AG			TRA	Tax Receivable Agreement


MS-30		Semiannual Report

Franklin Rising Dividends VIP Fund

This semiannual report for Franklin Rising Dividends VIP Fund covers the period ended June 30, 2018.

Class 1 Performance Summary as of June 30, 2018

The Fund’s Class 1 Shares posted a +0.63% total return* for the six-month period ended June 30, 2018.


		Semiannual Report			FRD-1

FRANKLIN RISING DIVIDENDS VIP FUND

Fund Goal and Main Investments

The Fund seeks long-term capital appreciation, with preservation of capital as an important consideration. Preservation of capital, while not a goal, is also an important consideration. Under normal market conditions, the Fund invests at least 80% of its net assets in equity securities of financially sound companies that have paid consistently rising dividends.

Fund Risks

All investments involve risks, including possible loss of principal. Value securities may not increase in price as anticipated or may decline further in value. For stocks paying dividends, dividends are not guaranteed, and can increase, decrease or be totally eliminated without notice. Securities issued by smaller and midsize companies may be more volatile in price than those of larger companies, involve substantial risks and should be considered speculative. To the extent that the Fund focuses on particular countries, regions, industries, sectors or types of investment from time to time, the Fund may be subject to greater risks of adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks that are heightened in developing countries. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Standard & Poor’s^® 500 Index (S&P 500^®) rose +2.65% for the same period.¹ Please note the Fund employs a bottom-up stock selection process, and the managers invest in securities without regard to benchmark comparisons.

Economic and Market Overview

The US economy continued to grow during the six months under review. After moderating for three consecutive quarters, the economy grew faster in 2018’s second quarter, driven by

consumer spending, exports, business investment and government spending. The manufacturing and services sectors expanded during the period. The unemployment rate declined slightly from 4.1% in December 2017, as reported at the beginning of the six-month period, to 4.0% at period-end.² Annual inflation, as measured by the Consumer Price Index, increased from 2.1% in December 2017, as reported at the beginning of the period, to 2.9% at period-end.²

US equity markets rose overall during the period, benefiting from mostly upbeat economic data and better US corporate earnings. At certain points during the period, markets were also supported by the expectations of gradual rate increases. After reaching new all-time highs in January 2018, US stocks declined in February amid concerns that strong economic growth and rising inflation would lead the Fed to increase its target rate faster than expected. In March, markets were pressured further by a broad sell-off in information technology stocks due to a potential for tighter regulation in the sector arising from concerns about consumer data privacy. Other factors that curbed investor sentiment included tensions between the US and North Korea, political uncertainties in the US, the Trump administration’s protectionist policies and escalating trade tensions between the US and China. An overall easing of tensions in the Korean peninsula and intermittent US-China trade negotiations partially offset some of these concerns. However, US trade disputes with its allies and China near period-end dampened investor sentiment. In this

1. Source: Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

2. Source: Bureau of Labor Statistics.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).


FRD-2		Semiannual Report

FRANKLIN RISING DIVIDENDS VIP FUND

environment, the broad US stock market, as measured by the S&P 500, generated a +2.65% total return for the period.¹

Investment Strategy

We are a research-driven, fundamental investment adviser, pursuing a disciplined value-oriented strategy. As bottom-up investors concentrating primarily on individual securities, we seek fundamentally sound companies that we believe meet our screening criteria, which include consistent, substantial dividend increases; reinvested earnings; and strong balance sheets. We attempt to acquire such stocks at attractive prices, often when they are out of favor with other investors. In following these criteria, we do not necessarily focus on companies whose securities pay a high dividend but rather on companies that consistently raise their dividends.

Manager’s Discussion

During the six-month period ended June 30, 2018, some holdings that contributed to absolute performance included Microsoft; NIKE; and Becton, Dickinson and Co.

Shares of Microsoft, a software company, moved higher as its cloud-based initiatives continued to deliver strong results, led by Office 365 subscriber growth and Azure revenue growth. Additionally, prudent expense management and better hardware gross margins led to better first quarter operating results and earnings per share growth, which topped the consensus expectation. The company has raised its dividend for 14 consecutive years.

Shares of NIKE, a designer and marketer of athletic footwear, rose based on improved results in its key North American market. The company employed a mix of direct selling, e-commerce, differentiated retail concepts and innovation to drive growth. Greater use of technology has revolutionized NIKE’s ability to connect with customers, manage inventory and upgrade its manufacturing capabilities. NIKE has raised its dividend for 16 years.

Shares of Becton, Dickinson and Co., a global medical technology company, rose based on two strong quarterly earnings reports. Factors that accelerated revenue growth included a strong pipeline, synergies from the acquisition of C. R. Bard and emerging market exposure. Becton has raised its dividend for 46 years.

Conversely, some holdings that detracted from absolute performance included Albemarle, ABM Industries and Dover.

Shares of Albemarle, a specialty chemicals producer, declined despite the company reporting strong performance during the

Portfolio Composition

Based on Total Net Assets as of 6/30/18

LOGO

period. Although lithium producers broadly believe that the industry is unlikely to suffer from oversupply, investor concerns about the possible negative impact on pricing from such a scenario continue to weigh on the industry as a whole. We believe Albemarle’s long-term contracts, priced below lithium spot price, and low cost position could provide insulation from spot price fluctuations. The company has increased its dividend for 24 consecutive years.


		Semiannual Report			FRD-3

FRANKLIN RISING DIVIDENDS VIP FUND

Shares of ABM Industries, a facility services contractor, declined during the period as the company’s exit from unprofitable contracts and increased investments have hurt growth and profitability. In addition, a secondary share offering announced in March put further downward pressure on the share price, as several private equity shareholders sold shares issued as part of last year’s acquisition of GCA Services Group. The management team has been clear about these challenges as part of the company’s comprehensive strategic turnaround plan, which we believe could improve ABM’s competitive position. The company has increased its dividend for 54 consecutive years.

Shares of Dover, a diversified industrial company, were weak during the period despite reporting solid financial results. Weak share performance during the period was likely due to investor concerns about the negative impact of restrictive trade actions. Although this theme has weighed on industrial stocks in general, we believe the recent appointment of Richard Tobin as Dover’s CEO could act as a catalyst in the near future given his reputation for strong operational leadership. Dover has grown its dividend for 62 consecutive years.

During the period, the Fund did not initiate new positions. We added to existing positions including Honeywell International, a diversified industrial company (eight consecutive years of dividend increases); Colgate-Palmolive, a consumer products company focused on household, health care and personal care products (56 consecutive years of dividend increases); and EOG Resources, a petroleum and natural gas exploration company.

We exited positions in The Archer Daniels Midland Company, Leggett & Platt and Brady. We also reduced several holdings including Arthur J. Gallagher & Co, John Wiley & Sons and the aforementioned Microsoft during the period.

Our 10 largest positions on June 30, 2018, represented 36.9% of the Fund’s total net assets. It is interesting to note how these 10 companies would respond to the Fund’s screening criteria based on a simple average of statistical measures. On average, these 10 companies have raised their dividends 22 years in a row and by 300% over the past 10 years. Their most recent year-over-year dividend increases averaged 10.1% with a yield of 1.5% on June 30, 2018, and a dividend payout ratio of 32.6%, based on estimates of calendar year 2018 operating earnings estimates. The average price/earnings ratio was 23.2 times calendar year 2018 estimates versus 17.1 for that of the unmanaged S&P 500.


Top 10 Holdings
6/30/18
Company *Sector/Industry*	% of Total Net Assets
Microsoft Corp. Software & Services		5.5%
Roper Technologies Inc. Industrial Conglomerates		5.2%
Stryker Corp. Health Care Equipment & Services		3.7%
Becton, Dickinson and Co. Health Care Equipment & Services		3.7%
Albemarle Corp. Materials		3.6%
Praxair Inc. Materials		3.4%
Accenture PLC Software & Services		3.3%
Texas Instruments Inc. Semiconductors & Semiconductor Equipment		2.9%
West Pharmaceutical Services Inc. Health Care Equipment & Services		2.8%
Honeywell International Inc. Industrial Conglomerates		2.8%

Thank you for your participation in Franklin Rising Dividends VIP Fund. We look forward to continuing to serve your investment needs.


FRD-4		Semiannual Report

FRANKLIN RISING DIVIDENDS VIP FUND

Class 1 Fund Expenses

Actual Fund Expenses

The table below provides information about the actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of ongoing Fund expenses but does not include the effect of ongoing Contract expenses, is used to calculate the “Ending Account Value.” You can estimate the Fund-level expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number under the headings “Actual” and “Fund-Level Expenses Paid During Period” (if Fund-Level Expenses Paid During Period were $ 7.50, then 8.6 × $7.50 = $64.50). In this illustration, the estimated expenses paid this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Actual
(actual return after expenses)

Hypothetical
(5% annual return before expenses)

Share

Class

Beginning Account

Value 1/1/18

Ending Account
Value 6/30/18

Fund-Level

Expenses Paid

During Period

1/1/18–6/30/18^1,2

Ending Account
Value 6/30/18

Fund-Level

Expenses Paid
During Period

1/1/18–6/30/18^1,2

Net

Annualized

Expense

Ratio²

Class 1

$1,000

$1,006.30

$3.08

$1,021.72

$3.11

0.62%

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above — in the far right column — multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include any ongoing expenses of the Contract for which the Fund is an investment option or acquired fund fees and expenses.


		Semiannual Report			FRD-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Rising Dividends VIP Fund


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 1
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$29.21			$25.51			$25.26			$29.63			$28.14			$22.03


Income from investment operations^a:

Net investment income^b		0.19			0.40			0.42			0.45			0.45			0.40

Net realized and unrealized gains (losses)		0.03			4.76			3.45			(1.33	)		2.03			6.16

Total from investment operations		0.22			5.16			3.87			(0.88	)		2.48			6.56


Less distributions from:

Net investment income		(0.44	)		(0.48	)		(0.44	)		(0.48	)		(0.44	)		(0.45	)

Net realized gains		(1.76	)		(0.98	)		(3.18	)		(3.01	)		(0.55	)		—

Total distributions		(2.20	)		(1.46	)		(3.62	)		(3.49	)		(0.99	)		(0.45	)

Net asset value, end of period		$27.23			$29.21			$25.51			$25.26			$29.63			$28.14


Total return^c		0.63%			20.85%			16.33%			(3.42)%			9.01%			30.05%

Ratios to average net assets^d

Expenses before waiver and payments by affiliates		0.62%			0.62%			0.63%			0.63%			0.62%			0.61%

Expenses net of waiver and payments by affiliates		0.62%	^e,f		0.62%	^e,f		0.62%	^e		0.63%	^f		0.62%	^f		0.61%

Net investment income		1.32%			1.49%			1.67%			1.65%			1.58%			1.59%

Supplemental data

Net assets, end of period (000’s)		$176,886			$216,015			$181,072			$143,376			$160,480			$168,380

Portfolio turnover rate		1.86%			3.36%			6.66%			4.74%			8.61%			0.07%

^bBased on average daily shares outstanding.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fBenefit of waiver and payments by affiliates rounds to less than 0.01%.


FRD-6		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Rising Dividends VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 2
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$28.46			$24.89			$24.72			$29.06			$27.62			$21.64


Income from investment operations^a:

Net investment income^b		0.15			0.33			0.35			0.37			0.37			0.33

Net realized and unrealized gains (losses)		0.02			4.63			3.37			(1.29	)		1.99			6.04


Total from investment operations		0.17			4.96			3.72			(0.92	)		2.36			6.37


Less distributions from:

Net investment income		(0.36	)		(0.41	)		(0.37	)		(0.41	)		(0.37	)		(0.39	)

Net realized gains		(1.76	)		(0.98	)		(3.18	)		(3.01	)		(0.55	)		—

Total distributions		(2.12	)		(1.39	)		(3.55	)		(3.42	)		(0.92	)		(0.39	)

Net asset value, end of period		$26.51			$28.46			$24.89			$24.72			$29.06			$27.62


Total return^c		0.50%			20.56%			16.04%			(3.65	)%		8.72%			29.69%

Ratios to average net assets^d

Expenses before waiver and payments by affiliates		0.87%			0.87%			0.88%			0.88%			0.87%			0.86%

Expenses net of waiver and payments by affiliates		0.87%	^e,f		0.87%	^e,f		0.87%	^e		0.88%	^f		0.87%	^f		0.86%

Net investment income		1.07%			1.24%			1.42%			1.40%			1.33%			1.34%

Supplemental data

Net assets, end of period (000’s)		$1,547,979			$1,640,883			$1,530,374			$1,310,783			$1,667,816			$1,752,012

Portfolio turnover rate		1.86%			3.36%			6.66%			4.74%			8.61%			0.07%

^bBased on average daily shares outstanding.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fBenefit of waiver and payments by affiliates rounds to less than 0.01%.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FRD-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Rising Dividends VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 4
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$28.54			$24.98			$24.81			$29.19			$27.76			$21.78


Income from investment operations^a:

Net investment income^b		0.14			0.30			0.32			0.35			0.35			0.32

Net realized and unrealized gains (losses)		0.02			4.65			3.39			(1.31	)		2.00			6.07

Total from investment operations		0.16			4.95			3.71			(0.96	)		2.35			6.39

Less distributions from:

Net investment income		(0.34	)		(0.41	)		(0.36	)		(0.41	)		(0.37	)		(0.41	)

Net realized gains		(1.76	)		(0.98	)		(3.18	)		(3.01	)		(0.55	)		—

Total distributions		(2.10	)		(1.39	)		(3.54	)		(3.42	)		(0.92	)		(0.41	)

Net asset value, end of period		$26.60			$28.54			$24.98			$24.81			$29.19			$27.76


Total return^c		0.46%			20.40%			15.93%			(3.75)%			8.62%			29.57%

Ratios to average net assets^d

Expenses before waiver and payments by affiliates		0.97%			0.97%			0.98%			0.98%			0.97%			0.96%

Expenses net of waiver and payments by affiliates		0.97%	^e,f		0.97%	^e,f		0.97%	^e		0.98%	^f		0.97%	^f		0.96%

Net investment income		0.97%			1.14%			1.32%			1.30%			1.23%			1.24%

Supplemental data

Net assets, end of period (000’s)		$35,211			$36,407			$28,579			$20,453			$15,503			$12,028

Portfolio turnover rate		1.86%			3.36%			6.66%			4.74%			8.61%			0.07%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and

repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which Franklin Templeton Variable Insurance

Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fBenefit of waiver and payments by affiliates rounds to less than 0.01%.


FRD-8		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2018 (unaudited)

Franklin Rising Dividends VIP Fund


		Shares		Value
	Common Stocks 99.2%
	Aerospace & Defense 3.8%
	General Dynamics Corp.		157,911	$	29,436,190
	United Technologies Corp.		299,511		37,447,860

					66,884,050

	Building Products 1.5%
	Johnson Controls International PLC		800,153		26,765,118

	Commercial & Professional Services 3.8%
	ABM Industries Inc.		704,666		20,562,154
	Cintas Corp.		178,275		32,993,354
	Matthews International Corp., A		238,957		14,050,672

					67,606,180

	Consumer Durables & Apparel 1.9%
	NIKE Inc., B		427,700		34,079,136

	Consumer Services 2.0%
	McDonald’s Corp.		184,245		28,869,349
	Yum! Brands Inc.		72,900		5,702,238

					34,571,587

	Diversified Financials 0.5%
	State Street Corp.		101,700		9,467,253

	Electrical Equipment 0.7%
a	nVent Electric PLC (United Kingdom)		499,900		12,547,490

	Energy 7.9%
a	Apergy Corp.		231,638		9,670,887
	Chevron Corp.		243,800		30,823,634
	EOG Resources Inc.		95,800		11,920,394
	Exxon Mobil Corp.		353,300		29,228,509
	Occidental Petroleum Corp.		357,390		29,906,395
	Schlumberger Ltd.		398,000		26,677,940

					138,227,759

	Food & Staples Retailing 2.3%
	Walgreens Boots Alliance Inc.		302,100		18,130,532
	Walmart Inc.		256,100		21,934,965

					40,065,497

	Food, Beverage & Tobacco 4.2%
	Bunge Ltd.		307,700		21,449,767
	McCormick & Co. Inc.		206,700		23,995,803
	PepsiCo Inc.		262,900		28,621,923

					74,067,493

	Health Care Equipment & Services 15.9%
	Abbott Laboratories		550,300		33,562,797
	Becton, Dickinson and Co.		270,000		64,681,200
	CVS Health Corp.		227,100		14,613,885
	DENTSPLY SIRONA Inc.		65,900		2,884,443
	Medtronic PLC		568,000		48,626,480
	Stryker Corp.		390,000		65,855,400
	West Pharmaceutical Services Inc.		501,918		49,835,438

					280,059,643


		Semiannual Report			FRD-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Rising Dividends VIP Fund (continued)


	Shares		Value
Common Stocks (continued)
Household & Personal Products 2.6%
Colgate-Palmolive Co.		327,700	$	21,238,237
The Procter & Gamble Co.		306,100		23,894,166

				45,132,403

Industrial Conglomerates 8.6%
Carlisle Cos. Inc.		101,061		10,945,917
Honeywell International Inc.		339,100		48,847,355
Roper Technologies Inc.		331,143		91,365,665

				151,158,937

Insurance 2.5%
Aflac Inc.		485,000		20,864,700
Arthur J. Gallagher & Co.		81,300		5,307,264
Erie Indemnity Co., A		144,547		16,949,581

				43,121,545

Machinery 3.9%
Donaldson Co. Inc.		294,168		13,272,860
Dover Corp.		463,276		33,911,803
Pentair PLC (United Kingdom)		496,500		20,892,720

				68,077,383

Materials 11.8%
Air Products and Chemicals Inc.		305,000		47,497,650
Albemarle Corp.		678,700		64,021,771
Ecolab Inc.		115,600		16,222,148
Nucor Corp.		338,155		21,134,687
Praxair Inc.		374,960		59,299,924

				208,176,180

Media 1.0%
Comcast Corp., A		286,000		9,383,660
John Wiley & Sons Inc., A		133,800		8,349,120

				17,732,780

Pharmaceuticals, Biotechnology & Life Sciences 4.5%
AbbVie Inc.		190,600		17,659,090
Johnson & Johnson		308,000		37,372,720
Perrigo Co. PLC		167,100		12,183,261
Pfizer Inc.		331,900		12,041,332
Roche Holding AG, ADR (Switzerland)		25,000		690,750

				79,947,153

Retailing 3.6%
The Gap Inc.		439,500		14,235,405
Ross Stores Inc.		185,000		15,678,750
Target Corp.		164,600		12,529,352
Tiffany & Co.		161,500		21,253,400

				63,696,907

Semiconductors & Semiconductor Equipment 5.8%
Analog Devices Inc.		457,737		43,906,133
Texas Instruments Inc.		468,800		51,685,200
Versum Materials Inc.		182,000		6,761,300

				102,352,633


FRD-10		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Rising Dividends VIP Fund (continued)


		Shares		Value
	Common Stocks (continued)
	Software & Services 9.5%
	Accenture PLC, A		350,400	$	57,321,936
	Microsoft Corp.		987,700		97,397,097
	Visa Inc., A		89,500		11,854,275

					166,573,308

	Trading Companies & Distributors 0.5%
	W.W. Grainger Inc.		28,100		8,666,040

	Transportation 0.4%
	United Parcel Service Inc., B		64,800		6,883,704


	Total Common Stocks (Cost $899,769,568)				1,745,860,179

	Short Term Investments (Cost $10,448,294) 0.6%
	Money Market Funds 0.6%
b,c	Institutional Fiduciary Trust Money Market Portfolio, 1.51%		10,448,294		10,448,294

	Total Investments (Cost $910,217,862) 99.8%				1,756,308,473
	Other Assets, less Liabilities 0.2%				3,766,985

	Net Assets 100.0%			$	1,760,075,458

See Abbreviations on page FRD-20.

^aNon-income producing.

^bSee Note 3(e) regarding investments in affiliated management investment companies.

^cThe rate shown is the annualized seven-day effective yield at period end.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FRD-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2018 (unaudited)


	Franklin Rising Dividends VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	899,769,568
Cost - Non-controlled affiliates (Note 3e)		10,448,294

Value - Unaffiliated issuers	$	1,745,860,179
Value - Non-controlled affiliates (Note 3e)		10,448,294
Receivables:
Investment securities sold		4,090,856
Capital shares sold		437,173
Dividends		1,834,152
Other assets		1,254

Total assets		1,762,671,908

Liabilities:
Payables:
Capital shares redeemed		882,681
Management fees		879,161
Distribution fees		672,603
Accrued expenses and other liabilities		162,005
Total liabilities		2,596,450

Net assets, at value	$	1,760,075,458

Net assets consist of:
Paid-in capital	$	832,082,911
Undistributed net investment income		5,491,440
Net unrealized appreciation (depreciation)		846,090,611
Accumulated net realized gain (loss)		76,410,496

Net assets, at value	$	1,760,075,458


Class 1:
Net assets, at value	$	176,886,189

Shares outstanding		6,496,006

Net asset value and maximum offering price per share	$	27.23


Class 2:
Net assets, at value	$	1,547,978,542

Shares outstanding		58,390,261

Net asset value and maximum offering price per share	$	26.51


Class 4:
Net assets, at value	$	35,210,727

Shares outstanding		1,323,520

Net asset value and maximum offering price per share	$	26.60


FRD-12		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2018 (unaudited)


	Franklin Rising Dividends VIP Fund
Investment income:
Dividends: (net of foreign taxes)*
Unaffiliated issuers	$	17,328,630
Non-controlled affiliates (Note 3e)		96,072

Total investment income		17,424,702

Expenses:
Management fees (Note 3a)		5,432,565
Distribution fees: (Note 3c)
Class 2		1,965,442
Class 4		61,762
Custodian fees (Note 4)		8,153
Reports to shareholders		107,274
Professional fees		41,524
Trustees’ fees and expenses		4,551
Other		15,534

Total expenses		7,636,805
Expense reductions (Note 4)		(149	)
Expenses waived/paid by affiliates (Note 3e)		(28,685	)

Net expenses		7,607,971

Net investment income		9,816,731

Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		76,412,885
Foreign currency transactions		(653	)

Net realized gain (loss)		76,412,232

Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(77,427,987	)

Net realized and unrealized gain (loss)		(1,015,755	)

Net increase (decrease) in net assets resulting from operations	$	8,800,976

*Foreign taxes withheld on dividends	$	4,873


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FRD-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets


	Franklin Rising Dividends VIP Fund
	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	9,816,731			$22,882,157
Net realized gain (loss)		76,412,232			108,533,229
Net change in unrealized appreciation (depreciation)		(77,427,987	)		207,698,448

Net increase (decrease) in net assets resulting from operations		8,800,976			339,113,834

Distributions to shareholders from:
Net investment income:
Class 1		(2,645,067	)		(3,388,715	)
Class 2		(19,814,681	)		(24,052,908	)
Class 4		(420,918	)		(476,793	)
Net realized gains:
Class 1		(10,684,448	)		(7,011,086	)
Class 2		(95,972,257	)		(57,291,559	)
Class 4		(2,154,046	)		(1,158,380	)

Total distributions to shareholders		(131,691,417	)		(93,379,441	)

Capital share transactions: (Note 2)
Class 1		(27,018,355	)		7,492,496
Class 2		15,437,655			(103,411,809	)
Class 4		1,240,595			3,465,199

Total capital share transactions		(10,340,105	)		(92,454,114	)

Net increase (decrease) in net assets		(133,230,546	)		153,280,279
Net assets:
Beginning of period		1,893,306,004			1,740,025,725

End of period	$	1,760,075,458		$	1,893,306,004

Undistributed net investment income included in net assets:
End of period	$	5,491,440		$	18,555,375


FRD-14		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Rising Dividends VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eighteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Rising Dividends VIP Fund (Fund) is included in this report. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers three classes of shares: Class 1, Class 2 and Class 4. Each class of shares may differ by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Investments in open-end mutual funds are valued at the closing NAV.


		Semiannual Report			FRD-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Rising Dividends VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

a. Financial Instrument Valuation (continued)

b. Foreign Currency Translation

c. Income and Deferred Taxes

d. Security Transactions, Investment Income, Expenses and Distributions


FRD-16		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Rising Dividends VIP Fund (continued)

with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

e. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and

liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

f. Guarantees and Indemnifications

2. Shares of Beneficial Interest

At June 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 1 Shares:
Shares sold		167,630		$	4,898,014			968,022		$	25,981,840
Shares issued in reinvestment of distributions		481,210			13,329,515			394,680			10,399,801
Shares redeemed		(1,5`48,584	)		(45,245,884	)		(1,064,640	)		(28,889,145	)

Net increase (decrease)		(899,744	)	$	(27,018,355	)		298,062		$	7,492,496

Class 2 Shares:
Shares sold		1,584,292		$	44,398,614			2,058,817		$	54,342,881
Shares issued in reinvestment of distributions		4,293,175			115,786,938			3,163,923			81,344,467
Shares redeemed		(5,148,403	)		(144,747,897	)		(9,039,170	)		(239,099,157	)

Net increase (decrease)		729,064		$	15,437,655			(3,816,430	)	$	(103,411,809	)

Class 4 Shares:
Shares sold		98,799		$	2,785,841			269,622		$	7,129,389
Shares issued in reinvestment of distributions		95,123			2,574,964			63,379			1,635,173
Shares redeemed		(145,855	)		(4,120,210	)		(201,530	)		(5,299,363	)

Net increase (decrease)		48,067		$	1,240,595			131,471		$	3,465,199


		Semiannual Report			FRD-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Rising Dividends VIP Fund (continued)

3. Transactions with Affiliates


Subsidiary		Affiliation
Franklin Advisers, Inc. (Advisers)		Investment manager
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent

a. Management Fees

The Fund pays an investment management fee to Advisers based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
0.750%		Up to and including $500 million
0.625%		Over $500 million, up to and including $1 billion
0.500%		Over $1 billion, up to and including $5 billion
0.490%		In excess of $5 billion

For the period ended June 30, 2018, the annualized gross effective investment management fee rate was 0.603% of the Fund’s average daily net assets.

b. Administrative Fees

c. Distribution Fees

d. Transfer Agent Fees

Investor Services, under terms of an agreement, performs shareholder servicing for the Fund and is not paid by the Fund for the services.


FRD-18		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Rising Dividends VIP Fund (continued)

e. Investments in Affiliated Management Investment Companies

The Fund invests in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the affiliated management investment companies, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. Prior to January 1, 2014, the waiver was accounted for as a reduction management fees. During the period ended June 30, 2018, the Fund held investments in affiliated management investment companies as follows:


	Number of Shares Held at Beginning of Period		Gross Additions		Gross Reductions			Number of Shares Held at End of Period		Value at End of Period		Dividend Income		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 1.51%		13,833,792		125,390,674		(128,776,172	)		10,448,294		$10,448,294		$96,072		$ —		$ —

4. Expense Offset Arrangement

5. Income Taxes

At June 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


Cost of investments	$	914,292,331

Unrealized appreciation	$	883,012,713
Unrealized depreciation		(40,996,571	)

Net unrealized appreciation (depreciation)	$	842,016,142

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of corporate actions.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2018, aggregated $33,348,897 and $154,824,663, respectively.

7. Credit Facility


		Semiannual Report			FRD-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Rising Dividends VIP Fund (continued)

7. Credit Facility (continued)

8. Fair Value Measurements

•

Level 1 – quoted prices in active markets for identical financial instruments

•

Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

•

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

9. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations


Selected Portfolio

ADR		American Depositary Receipt


FRD-20		Semiannual Report

Franklin Small Cap Value VIP Fund

This semiannual report for Franklin Small Cap Value VIP Fund covers the period ended June 30, 2018.

Class 1 Performance Summary as of June 30, 2018

The Fund’s Class 1 Shares posted a +2.42% total return* for the six-month period ended June 30, 2018.


		Semiannual Report			FSV-1

FRANKLIN SMALL CAP VALUE VIP FUND

Fund Goal and Main Investments

The Fund seeks long-term total return. Under normal market conditions, the Fund invests at least 80% of its net assets in investments of small capitalization companies. For this Fund, small capitalization companies are those with market capitalizations not exceeding either the highest market capitalization in the Russell 2000^® Index or the 12-month average of the highest market capitalization in the Russell 2000^® Index, whichever is greater, at the time of purchase. The Fund generally invests in equity securities of companies that the manager believes are undervalued at the time of purchase and have the potential for capital appreciation.

Fund Risks

All investments involve risks, including possible loss of principal. Value securities may not increase in price as anticipated, or may decline further in value. The Fund’s investments in smaller company stocks carry special risks as such stocks have historically exhibited greater price volatility than large-company stocks, particularly over the short term. Additionally, smaller companies often have relatively small revenues, limited product lines and a small market share. In addition, the Fund may invest up to 25% of its total assets in foreign securities, which involve special risks, including currency fluctuations and economic and political uncertainty. The Fund also may invest in equity real estate investment trusts (REITs). The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Russell 2000^® Value Index posted a +5.44% total return for the same period.¹ Please note the Fund employs a bottom-up stock selection process, and the managers invest in securities without regard to benchmark comparisons.

Economic and Market Overview

The US economy continued to grow during the six months under review. After moderating for three consecutive quarters,

the economy grew faster in 2018’s second quarter, driven by

US equity markets rose overall during the period, benefiting from mostly upbeat economic data and better US corporate earnings. At certain points during the period, markets were also supported by the expectations of gradual rate increases. After reaching new all-time highs in January 2018, US stocks declined in February amid concerns that strong economic growth and rising inflation would lead the Fed to increase its target rate faster than expected. In March, markets were pressured further by a broad sell-off in information technology stocks due to a potential for tighter regulation in the sector arising from concerns about consumer data privacy. Other factors that curbed investor sentiment included tensions between the US and North Korea, political uncertainties in the US, the Trump administration’s protectionist policies and escalating trade tensions between the US and China. An overall easing of tensions in the Korean peninsula and intermittent US-China trade negotiations partially offset some of these concerns. However, US trade disputes with its allies and China near period-end dampened investor sentiment. In this

1. Source: Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

2. Source: Bureau of Labor Statistics.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).


FSV-2		Semiannual Report

FRANKLIN SMALL CAP VALUE VIP FUND

environment, the broad US stock market, as measured by the Standard & Poor’s^® 500 Index, generated a +2.65% total return for the period.¹

Investment Strategy

We generally invest in stocks that we believe are undervalued and have the potential for capital appreciation. We consider a stock price a “value” when it trades at less than the price at which we believe it would trade if the market reflected all factors relating to the company’s worth. Accordingly, we invest in companies that we believe have, for example, stock prices that are low relative to current or historical or future earnings, book value, cash flow or sales; recent sharp price declines but the potential for good long-term earnings prospects; and valuable intangibles not reflected in the stock price. Companies in which we may invest include those that may be considered out of favor, due to actual or perceived cyclical or secular challenges, are experiencing temporal setbacks, diminished expectations, mismanagement or undermanagement, or are financially stressed.

Manager’s Discussion

For the period ended June 30, 2018, some contributors to absolute Fund performance included Hunting, McGrath RentCorp and Brinker International.

Shares of Hunting, an equipment provider for onshore and offshore well construction, completion and intervention services, rose with the price of crude oil. In addition, the stock price benefited from a better-than-expected trading update in March 2018 as robust onshore drilling activity in the US boosted Hunting’s well-completion business segment. Profits for full-year 2017 were expected to be minimal due to continued weakness in its offshore end markets, but Hunting’s results released in March indicated a better performance in the second half of 2017 and positive momentum entering 2018. Given the improvement in its operating results, Hunting also was able to loosen covenant restrictions placed on it by its lenders, allowing for the potential resumption of dividends in the future.

McGrath RentCorp, which rents relocatable modular offices and classrooms, electronic test equipment and oil storage tanks, performed well during the period. The stock reacted favorably to improving rental rates across all three business segments, which resulted in improved operating profit margins and earnings per share. The company benefited from improving utilization levels in electronic test equipment and oil storage tanks; the latter had been hampered by the decline in oil prices and on-shore drilling activity following the 2014 decline in oil

Portfolio Composition

Based on Total Net Assets as of 6/30/18

LOGO

prices. Additional positive factors were new management invoking improved capital discipline in an effort to increase return on invested capital and free cash flow generation, along with a material decline in McGrath’s tax rate from the recently enacted Tax Cuts and Jobs Act.

Restaurant stocks, including Brinker International, rose due to signs of further improvement in sales as a healthier labor market and US income tax cuts resulted in greater levels of


		Semiannual Report			FSV-3

FRANKLIN SMALL CAP VALUE VIP FUND


Top 10 Holdings
6/30/18
Company *Sector/Industry*	% of Total Net Assets
Chemical Financial Corp. Banks		3.1%
Energen Corp. Energy		2.9%
The Hanover Insurance Group Inc. Insurance		2.8%
Columbia Banking System Inc. Banks		2.8%
First Horizon National Corp. Banks		2.8%
Old Republic International Corp. Insurance		2.7%
Brinker International Inc. Consumer Services		2.7%
Astec Industries Inc. Machinery		2.5%
Zebra Technologies Corp. Technology Hardware & Equipment		2.4%
Maple Leaf Foods Inc. Food, Beverage & Tobacco		2.3%

consumer confidence. In the case of Brinker, a revamped menu and focus on driving increased traffic through quality and value offerings helped to improve same-store sales trends to the highest levels since 2015. Although same-store sales on a year-over-year basis remained slightly negative, we are optimistic that a return to positive trends could occur in the near future. Furthermore, the company has stated its intention to utilize some of the benefits from corporate tax reform to remodel a significant number of restaurants.

Detractors from absolute Fund performance included Manitowoc, Thor Industries and Detour Gold³.

Manitowoc, which is a manufacturer of cranes, underperformed during the period due to investor concerns that higher steel prices could suppress margins. The focus on steel prices overshadowed Manitowoc’s third consecutive quarter of year-over-year revenue growth and fourth consecutive quarter of year-over-year new order growth. We believe the new management team’s decision to significantly reduce excess capacity, coupled with price increases and an improved demand cycle for cranes, could help offset the impact of higher steel prices.

Thor Industries, a leading original equipment manufacturer of recreational vehicles (RVs) saw its shares decline due to investor concerns about growing inventory levels among its dealership customers stemming from slower-than-expected sales, as well as rising steel and aluminum costs. We believe that earlier-than-normal ordering patterns by RV dealers, coupled with poor weather conditions that delayed the start of the selling season in some areas, were negative factors. However, sales in warmer weather states outperformed other regions, indicating an otherwise healthy demand environment. Nonetheless, we believe it will take some time for the industry to adjust to the elevated level of inventories and take appropriate measures to offset the increase in costs.

Detour Gold, a gold mining company with assets located in Ontario, Canada, was hurt by an unexpected structural increase in mining costs, which caused a reduction in Detour’s net asset value. As a result, we exited the position during the period.

During the reporting period, we added some new positions with the largest purchases including Carpenter Technology, a producer and distributor of premium specialty alloys; Retail Properties of America, a real estate investment trust that owns and manages shopping centers; and Synaptics, a developer of human interface hardware and software. We added to existing positions in Regal Beloit, a manufacturer of electric motors; Esterline Technologies, a specialized manufacturing company serving the aerospace and defense markets; and Caleres, a footwear company that owns and operates a variety of footwear brands. Conversely, we exited some positions including BRP and Pinnacle Financial Partners. We also reduced our positions in Spirit Airlines, Universal Forest Products and Simpson Manufacturing.

Thank you for your participation in Franklin Small Cap Value VIP Fund. We look forward to serving your future investment needs.

3. Not held at period-end.


FSV-4		Semiannual Report

FRANKLIN SMALL CAP VALUE VIP FUND


		Semiannual Report			FSV-5

FRANKLIN SMALL CAP VALUE VIP FUND

Class 1 Fund Expenses

Actual Fund Expenses

The table below provides information about the actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of ongoing Fund expenses but does not include the effect of ongoing Contract expenses, is used to calculate the “Ending Account Value.” You can estimate the Fund-level expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number under the headings “Actual” and “Fund-Level Expenses Paid During Period” (if Fund-Level Expenses Paid During Period were $ 7.50, then 8.6 × $7.50 = $64.50). In this illustration, the estimated expenses paid this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Actual
( actual return after expenses)

Hypothetical
(5% annual return before expenses)

Share

Class

Beginning Account
Value 1/1/18

Ending Account

Value 6/30/18

Fund-Level

Expenses Paid

During Period

1/1/18–6/30/18^1,2

Ending Account
Value 6/30/18

Fund-Level

Expenses Paid

During Period
1/1/18–6/30/18^1,2

Net
Annualized
Expense
Ratio²

Class 1

$1,000

$1,024.20

$3.26

$1,021.57

$3.26

0.65%

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above — in the far right column — multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include any ongoing expenses of the Contract for which the Fund is an investment option or acquired fund fees and expenses.


FSV-6		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Small Cap Value VIP Fund


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 1
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$20.43			$19.93			$18.12			$22.81			$24.54			$18.58


Income from investment operations^a:

Net investment income^b		0.11			0.21	^c		0.15			0.21			0.19			0.19

Net realized and unrealized gains (losses)		0.43			1.82			4.79			(1.53	)		0.06			6.45

Total from investment operations		0.54			2.03			4.94			(1.32	)		0.25			6.64


Less distributions from:

Net investment income		(0.23	)		(0.15	)		(0.21	)		(0.20	)		(0.20	)		(0.32	)

Net realized gains		(2.98	)		(1.38	)		(2.92	)		(3.17	)		(1.78	)		(0.36	)

Total distributions		(3.21	)		(1.53	)		(3.13	)		(3.37	)		(1.98	)		(0.68	)

Net asset value, end of period		$17.76			$20.43			$19.93			$18.12			$22.81			$24.54


Total return^d		2.42%			10.92%			30.54%			(7.18)%			0.88%			36.50%

Ratios to average net assets^e

Expenses before waiver and payments by affiliates		0.66%			0.66%			0.66%			0.65%			0.63%			0.63%

Expenses net of waiver and payments by affiliates		0.65%	^f		0.65%	^f		0.64%	^f		0.64%	^f		0.63%	^f,g		0.63%

Net investment income		1.09%			1.06%	^c		0.84%			1.04%			0.82%			0.90%

Supplemental data

Net assets, end of period (000’s)		$49,186			$51,245			$47,831			$45,897			$57,843			$62,408

Portfolio turnover rate		25.36%			33.36%			34.60%			27.05%			19.45%			10.44%

^bBased on average daily shares outstanding.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gBenefit of waiver and payments by affiliates rounds to less than 0.01%.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FSV-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Small Cap Value VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 2
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$19.80			$19.36			$17.68			$22.32			$24.07			$18.23


Income from investment operations^a:

Net investment income^b		0.08			0.15	^c		0.10			0.16			0.13			0.14

Net realized and unrealized gains (losses)		0.43			1.77			4.66			(1.49	)		0.05			6.34

Total from investment operations		0.51			1.92			4.76			(1.33	)		0.18			6.48


Less distributions from:

Net investment income		(0.18	)		(0.10	)		(0.16	)		(0.14	)		(0.15	)		(0.28	)

Net realized gains		(2.98	)		(1.38	)		(2.92	)		(3.17	)		(1.78	)		(0.36	)

Total distributions		(3.16	)		(1.48	)		(3.08	)		(3.31	)		(1.93	)		(0.64	)

Net asset value, end of period		$17.15			$19.80			$19.36			$17.68			$22.32			$24.07


Total return^d		2.34%			10.65%			30.19%			(7.39)%			0.57%			36.24%

Ratios to average net assets^e

Expenses before waiver and payments by affiliates		0.91%			0.91%			0.91%			0.90%			0.88%			0.88%

Expenses net of waiver and payments by affiliates		0.90%	^f		0.90%	^f		0.89%	^f		0.89%	^f		0.88%	^f,g		0.88%

Net investment income		0.84%			0.81%	^c		0.59%			0.79%			0.57%			0.65%

Supplemental data

Net assets, end of period (000’s)		$1,235,065			$1,302,055			$1,366,807			$1,172,173			$1,445,325			$1,606,802

Portfolio turnover rate		25.36%			33.36%			34.60%			27.05%			19.45%			10.44%

^bBased on average daily shares outstanding.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gBenefit of waiver and payments by affiliates rounds to less than 0.01%.


FSV-8		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Franklin Small Cap Value VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 4
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$20.22			$19.74			$17.96			$22.63			$24.37			$18.44


Income from investment operations^a:

Net investment income^b		0.07			0.14	^c		0.09			0.14			0.11			0.12

Net realized and unrealized gains (losses)		0.42			1.81			4.75			(1.52	)		0.05			6.42

Total from investment operations		0.49			1.95			4.84			(1.38	)		0.16			6.54


Less distributions from:

Net investment income		(0.15	)		(0.09	)		(0.14	)		(0.12	)		(0.12	)		(0.25	)

Net realized gains		(2.98	)		(1.38	)		(2.92	)		(3.17	)		(1.78	)		(0.36	)

Total distributions		(3.13	)		(1.47	)		(3.06	)		(3.29	)		(1.90	)		(0.61	)

Net asset value, end of period		$17.58			$20.22			$19.74			$17.96			$22.63			$24.37


Total return^d		2.23%			10.56%			30.12%			(7.52)%			0.48%			36.12%

Ratios to average net assets^e

Expenses before waiver and payments by affiliates		1.01%			1.01%			1.01%			1.00%			0.98%			0.98%

Expenses net of waiver and payments by affiliates		1.00%	^f		1.00%	^f		0.99%	^f		0.99%	^f		0.98%	^f,g		0.98%

Net investment income		0.74%			0.71%^c			0.49%			0.69%			0.47%			0.55%

Supplemental data

Net assets, end of period (000’s)		$29,920			$32,053			$32,751			$26,128			$30,452			$35,936

Portfolio turnover rate		25.36%			33.36%			34.60%			27.05%			19.45%			10.44%

^bBased on average daily shares outstanding.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gBenefit of waiver and payments by affiliates rounds to less than 0.01%.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FSV-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2018 (unaudited)

Franklin Small Cap Value VIP Fund


		Shares		Value
	Common Stocks 98.3%
	Aerospace & Defense 4.9%
	AAR Corp.		648,173	$	30,133,563
a	Esterline Technologies Corp.		349,555		25,797,159
a	Wesco Aircraft Holdings Inc.		736,087		8,280,978

					64,211,700

	Automobiles & Components 1.9%
	Gentex Corp.		36,000		828,720
	LCI Industries		120,269		10,842,250
	Thor Industries Inc.		129,559		12,617,751

					24,288,721

	Banks 17.4%
	Access National Corp.		244,865		7,003,139
	Bryn Mawr Bank Corp.		319,083		14,773,543
	Chemical Financial Corp.		722,542		40,223,913
	Columbia Banking System Inc.		908,300		37,149,470
	First Horizon National Corp.		2,041,037		36,412,100
	First of Long Island Corp.		614,355		15,266,722
	German American Bancorp Inc.		125,323		4,492,830
	Glacier Bancorp Inc.		542,000		20,964,560
	Lakeland Financial Corp.		551,400		26,571,966
	Peoples Bancorp Inc.		289,712		10,945,319
	TrustCo Bank Corp. NY		880,900		7,840,010
	Washington Trust Bancorp Inc.		124,891		7,256,167

					228,899,739

	Building Products 4.6%
a	Gibraltar Industries Inc.		758,279		28,435,462
	Insteel Industries Inc.		366,339		12,235,723
	Simpson Manufacturing Co. Inc.		302,381		18,805,074
	Universal Forest Products Inc.		17,640		645,977

					60,122,236

	Commercial & Professional Services 2.0%
a	Huron Consulting Group Inc.		48,106		1,967,536
	McGrath RentCorp.		318,789		20,169,780
a	Team Inc.		192,222		4,440,328

					26,577,644

	Construction & Engineering 0.2%
	EMCOR Group Inc.		42,134		3,209,768

	Consumer Durables & Apparel 0.4%
	La-Z-Boy Inc.		49,100		1,502,460
a	M/I Homes Inc.		126,339		3,345,457

					4,847,917

	Consumer Services 2.7%
	Brinker International Inc.		736,240		35,045,024

	Electrical Equipment 2.5%
	Encore Wire Corp.		75,262		3,571,182
	Regal Beloit Corp.		354,000		28,957,200

					32,528,382


FSV-10		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)


		Shares		Value
	Common Stocks (continued)
	Energy 7.3%
a	Energen Corp.		518,707	$	37,772,244
a	Hunting PLC (United Kingdom)		2,714,839		27,821,278
a	Natural Gas Services Group Inc.		173,987		4,106,093
a	Oil States International Inc.		804,623		25,828,398

					95,528,013

	Food, Beverage & Tobacco 4.6%
	Dairy Crest Group PLC (United Kingdom)		2,549,200		16,529,384
a	Landec Corp.		848,600		12,644,140
	Maple Leaf Foods Inc. (Canada)		1,213,649		30,696,768

					59,870,292

	Health Care Equipment & Services 1.2%
	Hill-Rom Holdings Inc.		90,101		7,869,421
	STERIS PLC		78,750		8,269,538

					16,138,959

	Industrial Conglomerates 0.5%
	Carlisle Cos. Inc.		66,400		7,191,784

	Insurance 9.6%
	Aspen Insurance Holdings Ltd.		86,800		3,532,760
	The Hanover Insurance Group Inc.		314,100		37,553,796
	Horace Mann Educators Corp.		589,548		26,293,841
	Old Republic International Corp.		1,789,700		35,632,927
	Validus Holdings Ltd.		346,300		23,409,880

					126,423,204

	Machinery 7.4%
	Astec Industries Inc.		554,150		33,138,170
	Federal Signal Corp.		295,697		6,886,783
	Kennametal Inc.		66,836		2,399,412
a	The Manitowoc Co. Inc.		126,744		3,277,600
	Mueller Industries Inc.		352,800		10,411,128
	Mueller Water Products Inc., A		2,159,000		25,303,480
	REV Group Inc.		400,761		6,816,945
	Titan International Inc.		789,683		8,473,299

					96,706,817

	Materials 7.1%
	A Schulman Inc.		167,228		7,441,646
	Carpenter Technology Corp.		369,424		19,420,620
a	Ingevity Corp.		145,500		11,765,130
	Minerals Technologies Inc.		314,052		23,663,818
	OceanaGold Corp. (Australia)		5,258,900		14,605,832
	PH Glatfelter Co.		128,479		2,516,904
	Reliance Steel & Aluminum Co.		159,330		13,947,748

					93,361,698

	Pharmaceuticals, Biotechnology & Life Sciences 0.3%
a	Cambrex Corp.		65,017		3,400,389

	Real Estate 6.2%
	Brandywine Realty Trust		1,087,000		18,348,560
	Highwoods Properties Inc.		336,600		17,075,718
	LTC Properties Inc.		319,555		13,657,781


		Semiannual Report		FSV-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)


		Shares		Value
	Common Stocks (continued)
	Real Estate (continued)
	Retail Properties of America Inc., A		1,475,211	$	18,853,196
	Sunstone Hotel Investors Inc.		837,097		13,912,552

					81,847,807

	Retailing 2.2%
	Caleres Inc.		844,245		29,033,586

	Semiconductors & Semiconductor Equipment 5.5%
a	Advanced Energy Industries Inc.		257,800		14,975,602
	Cohu Inc.		396,917		9,728,436
	Kulicke and Soffa Industries Inc. (Singapore)		292,500		6,967,350
	MKS Instruments Inc.		26,993		2,583,230
a	Synaptics Inc.		383,400		19,311,858
	Versum Materials Inc.		507,679		18,860,275

					72,426,751

	Technology Hardware & Equipment 5.9%
a	Coherent Inc.		42,508		6,649,101
a	Finisar Corp.		737,700		13,278,600
a	Plexus Corp.		440,774		26,243,684
a	Zebra Technologies Corp., A		217,200		31,113,900

					77,285,285

	Transportation 0.4%
	Heartland Express Inc.		273,486		5,073,165
a	Spirit Airlines Inc.		18,400		668,840

					5,742,005

	Utilities 3.5%
	Black Hills Corp.		249,400		15,265,774
	Connecticut Water Service Inc.		47,200		3,083,104
	IDACORP Inc.		117,289		10,818,737
	Spire Inc.		243,155		17,178,901

					46,346,516


	Total Common Stocks (Cost $987,494,965)				1,291,034,237


		Principal Amount

	Corporate Bonds 0.9%
	Energy 0.7%
	Unit Corp., senior sub. note, 6.625%, 5/15/21	$	9,632,000		9,656,080

	Machinery 0.2%
	Mueller Industries Inc., sub. bond, 6.00%, 3/01/27		2,378,000		2,342,330


	Total Corporate Bonds (Cost $11,671,222)				11,998,410


	Total Investments before Short Term Investments (Cost $999,166,187)				1,303,032,647


FSV-12		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)


		Shares		Value
	Short Term Investments (Cost $18,863,400) 1.4%
	Money Market Funds 1.4%
b,c	Institutional Fiduciary Trust Money Market Portfolio, 1.51%		18,863,400	$	18,863,400

	Total Investments (Cost $1,018,029,587) 100.6%				1,321,896,047
	Other Assets, less Liabilities (0.6)%				(7,725,045	)

	Net Assets 100.0%			$	1,314,171,002

^aNon-income producing.

^bSee Note 3(e) regarding investments in affiliated management investment companies.

^cThe rate shown is the annualized seven-day effective yield at period end.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FSV-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2018 (unaudited)


	Franklin Small Cap Value VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	999,166,187
Cost - Non-controlled affiliates (Note 3e)		18,863,400

Value - Unaffiliated issuers	$	1,303,032,647
Value - Non-controlled affiliates (Note 3e)		18,863,400
Receivables:
Investment securities sold		919,393
Capital shares sold		59,828
Dividends and interest		1,176,839
Other assets		881

Total assets		1,324,052,988

Liabilities:
Payables:
Investment securities purchased		7,011,498
Capital shares redeemed		1,458,197
Management fees		676,173
Distribution fees		542,559
Accrued expenses and other liabilities		193,559

Total liabilities		9,881,986

Net assets, at value	$	1,314,171,002

Net assets consist of:
Paid-in capital	$	912,334,743
Undistributed net investment income		6,225,475
Net unrealized appreciation (depreciation)		303,866,460
Accumulated net realized gain (loss)		91,744,324

Net assets, at value	$	1,314,171,002


Class 1:
Net assets, at value	$	49,185,608

Shares outstanding		2,768,982

Net asset value and maximum offering price per share	$	17.76


Class 2:
Net assets, at value	$	1,235,065,499

Shares outstanding		72,025,807

Net asset value and maximum offering price per share	$	17.15


Class 4:
Net assets, at value	$	29,919,895

Shares outstanding		1,701,604

Net asset value and maximum offering price per share	$	17.58


FSV-14		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2018 (unaudited)


	Franklin Small Cap Value VIP Fund
Investment income:
Dividends: (net of foreign taxes)*
Unaffiliated issuers	$	10,785,806
Non-controlled affiliates (Note 3e)		333,104
Interest:
Unaffiliated issuers		440,213

Total investment income		11,559,123

Expenses:
Management fees (Note 3a)		4,185,645
Distribution fees: (Note 3c)
Class 2		1,563,803
Class 4		53,336
Custodian fees (Note 4)		9,811
Reports to shareholders		149,953
Professional fees		29,305
Trustees’ fees and expenses		3,451
Other		15,010

Total expenses		6,010,314
Expense reductions (Note 4)		(69	)
Expenses waived/paid by affiliates (Note 3e)		(98,732	)

Net expenses		5,911,513

Net investment income		5,647,610

Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		93,833,160
Realized gain distributions from REITs		680,677
Foreign currency transactions		46,667

Net realized gain (loss)		94,560,504

Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(69,483,090	)
Translation of other assets and liabilities denominated in foreign currencies		(4,741	)

Net change in unrealized appreciation (depreciation)		(69,487,831	)

Net realized and unrealized gain (loss)		25,072,673

Net increase (decrease) in net assets resulting from operations	$	30,720,283

*Foreign taxes withheld on dividends	$	40,789


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report		FSV-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets


	Franklin Small Cap Value VIP Fund
	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	5,647,610		$	11,278,129
Net realized gain (loss)		94,560,504			193,444,952
Net change in unrealized appreciation (depreciation)		(69,487,831	)		(67,851,820	)

Net increase (decrease) in net assets resulting from operations		30,720,283			136,871,261

Distributions to shareholders from:
Net investment income:
Class 1		(536,056	)		(357,335	)
Class 2		(10,764,694	)		(6,657,162	)
Class 4		(222,383	)		(135,526	)
Net realized gains:
Class 1		(7,019,373	)		(3,344,066	)
Class 2		(183,325,811	)		(91,049,189	)
Class 4		(4,351,723	)		(2,178,640	)

Total distributions to shareholders		(206,220,040	)		(103,721,918	)

Capital share transactions: (Note 2)
Class 1		4,258,009			2,002,869
Class 2		98,310,306			(95,665,942	)
Class 4		1,749,294			(1,521,461	)

Total capital share transactions		104,317,609			(95,184,534	)

Net increase (decrease) in net assets		(71,182,148	)		(62,035,191	)
Net assets:
Beginning of period		1,385,353,150			1,447,388,341

End of period	$	1,314,171,002		$	1,385,353,150

Undistributed net investment income included in net assets:
End of period	$	6,225,475		$	12,100,998


FSV-16		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Small Cap Value VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eighteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Small Cap Value VIP Fund (Fund) is included in this report. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers three classes of shares: Class 1, Class 2 and Class 4. Each class of shares may differ by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Investments in open-end mutual funds are valued at the closing NAV.


		Semiannual Report		FSV-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

1. Organization and Significant Accounting

Policies (continued)

a. Financial Instrument Valuation (continued)

b. Foreign Currency Translation

c. Income and Deferred Taxes


FSV-18		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.

d. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income and realized gain distributions are recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

shareholders of the Trust. Fund specific expenses are charged directly to the Fund that incurred the expense.

e. Accounting Estimates

f. Guarantees and Indemnifications

2. Shares of Beneficial Interest

At June 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 1 Shares:
Shares sold		68,047		$	1,381,910			296,526		$	5,843,664
Shares issued in reinvestment of distributions		419,746			7,555,429			198,148			3,701,401
Shares redeemed		(227,074	)		(4,679,330	)		(386,641	)		(7,542,196	)

Net increase (decrease)		260,719		$	4,258,009			108,033		$	2,002,869


		Semiannual Report			FSV-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

2. Shares of Beneficial Interest (continued)


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 2 Shares:
Shares sold		1,525,161		$	29,817,047			4,717,681		$	89,392,050
Shares issued in reinvestment of distributions		11,167,463			194,090,505			5,389,208			97,706,351
Shares redeemed		(6,417,830	)		(125,597,246	)		(14,948,104	)		(282,764,343	)

Net increase (decrease)		6,274,794		$	98,310,306			(4,841,215	)	$	(95,665,942	)


Class 4 Shares:
Shares sold		43,820		$	872,956			232,357		$	4,483,471
Shares issued in reinvestment of distributions		256,684			4,574,106			124,955			2,314,166
Shares redeemed		(184,320	)		(3,697,768	)		(430,938	)		(8,319,098	)

Net increase (decrease)		116,184		$	1,749,294			(73,626	)	$	(1,521,461	)

3. Transactions with Affiliates


Subsidiary		Affiliation
Franklin Advisory Services, LLC (Advisory Services)		Investment manager
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent

a. Management Fees

The Fund pays an investment management fee to Advisory Services based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
0.750%		Up to and including $200 million
0.635%		Over $200 million, up to and including $700 million
0.600%		Over $700 million, up to and including $1.2 billion
0.575%		Over $1.2 billion, up to and including $1.3 billion
0.475%		In excess of $1.3 billion

For the period ended June 30, 2018, the annualized gross effective investment management fee rate was 0.630% of the Fund’s average daily net assets.

b. Administrative Fees

Under an agreement with Advisory Services, FT Services provides administrative services to the Fund. The fee is paid by Advisory Services based on the Fund’s average daily net assets, and is not an additional expense of the Fund.


FSV-20		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

c. Distribution Fees

d. Transfer Agent Fees

Investor Services, under terms of an agreement, performs shareholder servicing for the Fund and is not paid by the Fund for the services.

e. Investments in Affiliated Management Investment Companies

The Fund invests in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the affiliated management investment companies, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. Prior to January 1, 2014, the waiver was accounted for as a reduction to management fees. During the period ended June 30, 2018, the Fund held investments in affiliated management investment companies as follows:


	Number of Shares Held at Beginning of Period		Gross Additions		Gross Reductions			Number of Shares Held at End of Period		Value at End of Period		Dividend Income		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 1.51%		43,492,005		125,341,722		(149,970,327	)		18,863,400		$18,863,400		$333,104		$ —		$ —

4. Expense Offset Arrangement

5. Income Taxes

At June 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


Cost of investments	$1,020,177,850

Unrealized appreciation	$310,865,909
Unrealized depreciation	(9,147,712	)

Net unrealized appreciation (depreciation)	$301,718,197

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of wash sales.


		Semiannual Report		FSV-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2018, aggregated $325,261,925 and $389,142,527, respectively.

7. Credit Facility

8. Fair Value Measurements

•

Level 1 – quoted prices in active markets for identical financial instruments

•

Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

•

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2018, in valuing the Fund’s assets carried at fair value, is as follows:


	Level 1		Level 2		Level 3		Total

Assets:
Investments in Securities:^a
Equity Investments	$	1,291,034,237	$	—	$	—	$	1,291,034,237
Corporate Bonds		—		11,998,410		—		11,998,410
Short Term Investments		18,863,400		—		—		18,863,400

Total Investments in Securities	$	1,309,897,637	$	11,998,410	$	—	$	1,321,896,047

^aFor detailed categories, see the accompanying Statement of Investments.


FSV-22		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

9. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.


		Semiannual Report		FSV-23

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Franklin Small-Mid Cap Growth VIP Fund

We are pleased to bring you Franklin Small-Mid Cap Growth VIP Fund’s semiannual report for the period ended June 30, 2018.

Class 1 Performance Summary as of June 30, 2018

The Fund’s Class 1 Shares posted a +5.70% total return* for the six-month period ended June 30, 2018.


		Semiannual Report		FSC-1

FRANKLIN SMALL-MID CAP GROWTH VIP FUND

Fund Goal and Main Investments

The Fund seeks long-term capital growth. Under normal market conditions, the Fund invests at least 80% of its net assets in equity securities of small-capitalization and mid-capitalization companies. For this Fund, small cap companies are those within the market capitalization range of companies in the Russell 2500^™ Index at the time of purchase, and midcap companies are those within the market capitalization range of companies in the Russell Midcap^® Index at the time of purchase.¹

Fund Risks

All investments involve risks, including possible loss of principal. Growth stock prices reflect projections of future earnings or revenues, and can, therefore, fall dramatically if the company fails to meet those projections. Smaller, midsized or relatively new or unseasoned companies can be particularly sensitive to changing economic conditions, and their prospects for growth are less certain than those of larger, more established companies. Historically, these securities have experienced more price volatility than larger company stocks, especially over the short term. To the extent the Fund focuses on particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risk of adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. From time to time, the trading market for a particular security or type of security in which the Fund invests may become less liquid or even illiquid. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Fund’s narrow benchmark, the Russell Midcap^® Growth Index, generated a +5.40% total return, and its broad benchmark, the Standard & Poor’s^® 500 Index (S&P 500^®), produced a +2.65% total return for the same period.²

Portfolio Composition

Based on Total Net Assets as of 6/30/18

LOGO

Economic and Market Overview

The US economy continued to grow during the six months under review. After moderating for three consecutive quarters, the economy grew faster in 2018’s second quarter, driven by consumer spending, exports, business investment and government spending. The manufacturing and services sectors expanded during the period. The unemployment rate declined slightly from 4.1% in December 2017, as reported at the beginning of the six-month period, to 4.0% at period-end.³ Annual inflation, as measured by the Consumer Price Index, increased from 2.1% in December 2017, as reported at the beginning of the period, to 2.9% at period-end.³

1. Please see Index Descriptions following the Fund Summaries.

2. Source: Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

3. Source: Bureau of Labor Statistics.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).


FSC-2		Semiannual Report

FRANKLIN SMALL-MID CAP GROWTH VIP FUND

gradually raise interest rates in an effort to keep the economy from overheating and as inflation increases toward the Fed’s target. However, he noted there was no evidence of the economy overheating and he had yet to see a clear upward move in wages. The Fed raised its target range for the federal funds rate 0.25% each at its March and June 2018 meetings to 1.75%–2.00% and continued reducing its balance sheet as part of its ongoing plan to normalize monetary policy. In June, the Fed upgraded its economic forecast for 2018 and its inflation forecasts for 2018 and 2019. Furthermore, the Fed forecasted an additional rate hike for 2018 and 2019 than previously anticipated.

Investment Strategy

We use fundamental, bottom-up research to seek companies meeting our criteria of growth potential, quality and valuation. In seeking sustainable growth characteristics, we look for companies we believe can produce sustainable earnings and cash flow growth, evaluating the long-term market opportunity and competitive structure of an industry to target leaders and emerging leaders. We define quality companies as those with strong and improving competitive positions in attractive markets. We also believe important attributes of quality are experienced and talented management teams as well as financial strength reflected in the capital structure, gross and operating margins, free cash flow generation and returns on capital employed. In assessing value, we consider whether


Top 10 Holdings
6/30/18
Company *Sector/Industry*	% of Total Net Assets
Roper Technologies Inc. Industrials		2.5%
Edwards Lifesciences Corp. Health Care		2.0%
2U Inc. Information Technology		2.0%
ServiceNow Inc. Information Technology		1.9%
GoDaddy Inc. Information Technology		1.8%
Worldpay Inc. Information Technology		1.8%
CoStar Group Inc. Industrials		1.7%
SBA Communications Corp. Real Estate		1.6%
Rockwell Automation Inc. Industrials		1.6%
Autodesk Inc. Information Technology		1.5%

security prices fully reflect the balance of the sustainable growth opportunities relative to business and financial risks.

Manager’s Discussion

During the period under review, most sectors represented in the Fund’s portfolio generated positive returns and contributed to absolute performance. Relative to the Fund’s narrow benchmark, the Russell Midcap^® Growth Index, key contributors included the IT sector, due to stock selection and an overweighted position. An underweighted position and stock selection in the materials sector also benefited relative results, as did stock selection in health care.

In IT, 2U, a provider of cloud-based software-as-a-service solutions for non-profit colleges and universities, contributed to relative performance. The company reported quarterly results that exceeded consensus expectations, and it raised its 2018 revenue guidance, largely due to early strength in recently acquired GetSmarter. 2U has continued to progress in line with its multi-year accelerating annual growth guidance. In addition, the company is actively working on the undergraduate market at the request of current partners, which we believe could represent the next wave of growth for the company. Domain name registration and web hosting services provider GoDaddy also benefited results. The company reported quarterly revenues that exceeded consensus expectations, with organic revenue growth accelerating. In addition, business application


		Semiannual Report		FSC-3

FRANKLIN SMALL-MID CAP GROWTH VIP FUND

revenue grew significantly. Commercial real estate information company CoStar Group also contributed to the Fund’s relative performance in the IT sector. CoStar Group’s stock rose amid solid quarterly results. The company’s net bookings strength has led to positive revenue revisions, and profitability is improving.

In the health care sector, DexCom, a medical devices company, and Edward Lifesciences, a provider of health products and technologies, contributed to relative performance.

Other notable individual contributors included pizza delivery company Domino’s Pizza and education services provider Grand Canyon Education.

In contrast, stock selection in the energy and consumer discretionary sectors detracted from the Fund’s relative performance. In energy, oilfield services provider RPC hindered results, as did independent oil and natural gas company Jagged Peak Energy (not part of the index).

In the consumer discretionary sector, NVR, which builds and sells residential properties, hindered relative performance. The company’s shares declined amid lower homebuilding revenue and higher expenses. Other detractors in the sector included discount retailer Dollar Tree and recreational vehicle manufacturer Thor Industries.

Other key individual detractors included machine vision products provider Cognex and machinery firm Stanley Black & Decker. During the period, Cognex confirmed consumer electronics-related fears by issuing flat revenue guidance through the end of the year. Quarterly revenues came in below consensus expectations, although earnings per share were better than expected. Stanley Black & Decker reported revenues slightly above consensus expectations. However, its shares declined amid softer operating margins and guidance for future growth to come in below recent levels.

Thank you for your participation in Franklin Small-Mid Cap Growth VIP Fund. We look forward to serving your future investment needs.


FSC-4		Semiannual Report

FRANKLIN SMALL-MID CAP GROWTH VIP FUND

Class 1 Fund Expenses

Actual Fund Expenses

The table below provides information about the actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of ongoing Fund expenses but does not include the effect of ongoing Contract expenses, is used to calculate the “Ending Account Value.” You can estimate the Fund-level expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number under the headings “Actual” and “Fund-Level Expenses Paid During Period” (if Fund-Level Expenses Paid During Period were $ 7.50, then 8.6 × $7.50 = $64.50). In this illustration, the estimated expenses paid this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Actual
(actual return after expenses)

Hypothetical
(5% annual return before expenses)

Share

Class

Beginning Account
Value 1/1/18

Ending Account
Value 6/30/18

Fund-Level

Expenses Paid
During Period
1/1/18–6/30/18^1,2

Ending Account
Value 6/30/18

Fund-Level

Expenses Paid
During Period
1/1/18–6/30/18^1,2

Net
Annualized
Expense
Ratio²

Class 1

$1,000

$1,057.00

$4.28

$1,020.63

$4.21

0.84%

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above — in the far right column — multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include any ongoing expenses of the Contract for which the Fund is an investment option or acquired fund fees and expenses.


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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Small-Mid Cap Growth VIP Fund


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 1
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$19.71			$17.77			$19.09			$24.95			$28.38			$21.87


Income from investment operations^a:

Net investment income (loss)^b		(0.02	)		(0.04	)		(0.03	)		—	^c,d		(0.07	)		(0.09	)

Net realized and unrealized gains (losses)		1.22			3.74			0.77			(0.03	)		2.04			8.19

Total from investment operations		1.20			3.70			0.74			(0.03	)		1.97			8.10


Less distributions from net realized gains		(1.92	)		(1.76	)		(2.06	)		(5.83	)		(5.40	)		(1.59	)

Net asset value, end of period		$18.99			$19.71			$17.77			$19.09			$24.95			$28.38


Total return^e		5.70%			21.75%			4.40%			(2.44)%			7.78%			38.50%

Ratios to average net assets^f

Expenses before waiver and payments by affiliates		0.85%			0.85%			0.84%			0.81%			0.80%			0.80%

Expenses net of waiver and payments by affiliates		0.84%			0.84%	^g		0.82%	^g		0.81%	^h		0.80%	^h		0.80%	^g

Net investment income (loss)		(0.22)%			(0.24)%			(0.16)%			0.01%	^d		(0.29)%			(0.35)%

Supplemental data

Net assets, end of period (000’s)		$38,473			$36,864			$31,756			$87,866			$99,803			$98,020

Portfolio turnover rate		13.91%			40.49%			32.23%	ⁱ		37.85%			48.73%			42.77%

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

^dNet investment income per share includes approximately $0.05 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been (0.24)%.

^eTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gBenefit of expense reduction rounds to less than 0.01%.

^hBenefit of waiver and payments by affiliates rounds to less than 0.01%.

ⁱExcludes the value of portfolio securities delivered as a result of a redemption in-kind.


FSC-6		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Small-Mid Cap Growth VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 2
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$17.83			$16.27			$17.69			$23.56			$27.16			$21.04


Income from investment operations^a:

Net investment income (loss)^b		(0.04	)		(0.08	)		(0.07	)		(0.05	)^c		(0.13	)		(0.14	)

Net realized and unrealized gains (losses)		1.11			3.40			0.71			0.01			1.93			7.85

Total from investment operations		1.07			3.32			0.64			(0.04	)		1.80			7.71


Less distributions from net realized gains		(1.92	)		(1.76	)		(2.06	)		(5.83	)		(5.40	)		(1.59	)

Net asset value, end of period		$16.98			$17.83			$16.27			$17.69			$23.56			$27.16


Total return^d		5.57%			21.40%			4.17%			(2.66)%			7.47%			38.15%

Ratios to average net assets^e

Expenses before waiver and payments by affiliates		1.10%			1.10%			1.09%			1.06%			1.05%			1.05%

Expenses net of waiver and payments by affiliates		1.09%			1.09%	^f		1.07%	^f		1.06%	^g		1.05%	^g		1.05%	^f

Net investment income (loss)		(0.47)%			(0.49)%			(0.41)%			(0.24)%	^c		(0.54)%			(0.60)%

Supplemental data

Net assets, end of period (000’s)		$385,584			$390,094			$392,777			$478,649			$582,772			$660,806

Portfolio turnover rate		13.91%			40.49%			32.23%	^h		37.85%			48.73%			42.77%

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.05 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been (0.49)%.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^hExcludes the value of portfolio securities delivered as a result of a redemption in-kind.


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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Small-Mid Cap Growth VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 4
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$18.47			$16.81			$18.23			$24.14			$27.72			$21.47


Income from investment operations^a:

Net investment income (loss)^b		(0.05	)		(0.10	)		(0.09	)		(0.07	)^c		(0.16	)		(0.17	)

Net realized and unrealized gains (losses)		1.15			3.52			0.73			(0.01	)		1.98			8.01

Total from investment operations		1.10			3.42			0.64			(0.08	)		1.82			7.84


Less distributions from net realized gains		(1.92	)		(1.76	)		(2.06	)		(5.83	)		(5.40	)		(1.59	)

Net asset value, end of period		$17.65			$18.47			$16.81			$18.23			$24.14			$27.72


Total return^d		5.55%			21.30%			4.04%			(2.77)%			7.39%			37.99%

Ratios to average net assets^e

Expenses before waiver and payments by affiliates		1.20%			1.20%			1.19%			1.16%			1.15%			1.15%

Expenses net of waiver and payments by affiliates		1.19%			1.19%	^f		1.17%	^f		1.16%	^g		1.15%	^g		1.15%	^f

Net investment income (loss)		(0.57)%			(0.59)%			(0.51)%			(0.34)%	^c		(0.64)%			(0.70)%

Supplemental data

Net assets, end of period (000’s)		$15,431			$15,829			$13,825			$15,105			$16,384			$19,132

Portfolio turnover rate		13.91%			40.49%			32.23%	^h		37.85%			48.73%			42.77%

^bBased on average daily shares outstanding.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^hExcludes the value of portfolio securities delivered as a result of a redemption in-kind.


FSC-8		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2018 (unaudited)


Franklin Small-Mid Cap Growth VIP Fund
		Shares		Value

	Common Stocks 96.9%
	Consumer Discretionary 15.0%
	Aptiv PLC		63,777	$	5,843,886
a	Burlington Stores Inc.		29,500		4,440,635
a	Dollar Tree Inc.		62,411		5,304,935
	Domino’s Pizza Inc.		18,700		5,276,579
a,b,c	DraftKings Inc.		733,541		1,621,649
	Expedia Group Inc.		32,500		3,906,175
a	Grand Canyon Education Inc.		44,157		4,928,363
	Hasbro Inc.		20,000		1,846,200
a	Liberty Broadband Corp., C		36,550		2,767,566
	MGM Resorts International		51,000		1,480,530
a	Norwegian Cruise Line Holdings Ltd.		41,778		1,974,010
a	NVR Inc.		1,482		4,402,059
a	O’Reilly Automotive Inc.		13,107		3,585,682
	Ross Stores Inc.		73,885		6,261,754
	Tapestry Inc.		18,500		864,135
	Thor Industries Inc.		22,700		2,210,753
	Tractor Supply Co.		32,037		2,450,510
	Vail Resorts Inc.		13,000		3,564,470
	Wynn Resorts Ltd.		18,000		3,012,120

					65,742,011

	Consumer Staples 3.2%
	Church & Dwight Co. Inc.		92,500		4,917,300
a	Hostess Brands Inc., A		93,200		1,267,520
	Lamb Weston Holdings Inc.		35,000		2,397,850
a	Monster Beverage Corp.		66,516		3,811,367
	Pinnacle Foods Inc.		22,794		1,482,978

					13,877,015

	Energy 2.0%
	Cabot Oil & Gas Corp., A		98,749		2,350,226
a	Concho Resources Inc.		20,900		2,891,515
	Diamondback Energy Inc.		3,400		447,338
a,d	Jagged Peak Energy Inc.		150,000		1,953,000
d	RPC Inc		73,000		1,063,610

					8,705,689

	Financials 8.1%
	Arthur J. Gallagher & Co.		81,608		5,327,370
	CBOE Global Markets Inc.		37,000		3,850,590
	First Republic Bank		44,000		4,258,760
	MarketAxess Holdings Inc.		19,296		3,817,907
	Moody’s Corp.		26,909		4,589,599
	MSCI Inc.		10,000		1,654,300
	The Progressive Corp.		54,200		3,205,930
a	SVB Financial Group		17,178		4,960,319
a	Western Alliance Bancorp		22,000		1,245,420
	Willis Towers Watson PLC		19,100		2,895,560

					35,805,755

	Health Care 12.1%
a	ABIOMED Inc.		6,800		2,781,540
a	Agios Pharmaceuticals Inc.		6,500		547,495
a	Alkermes PLC		19,200		790,272


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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments (Unaudited)


Franklin Small-Mid Cap Growth VIP Fund (continued)
		Shares		Value

	Common Stocks (continued)
	Health Care (continued)
a	Alnylam Pharmaceuticals Inc.		8,900	$	876,561
a	BioMarin Pharmaceutical Inc.		25,208		2,374,594
a	Centene Corp.		25,000		3,080,250
a	Cerner Corp.		58,895		3,521,332
a	DexCom Inc.		27,188		2,582,316
a	Edwards Lifesciences Corp.		61,521		8,955,612
a	Exelixis Inc.		43,700		940,424
a	Incyte Corp.		24,669		1,652,823
a,d	Inspire Medical Systems Inc.		18,000		641,880
a	Insulet Corp.		30,688		2,629,962
a	Ionis Pharmaceuticals Inc.		13,400		558,378
a	iRhythm Technologies Inc.		24,300		1,971,459
a	Jazz Pharmaceuticals PLC		9,600		1,654,080
a	Mettler-Toledo International Inc.		8,855		5,123,769
a	Neurocrine Biosciences Inc.		13,244		1,301,090
a	Nevro Corp.		30,081		2,401,968
a	Penumbra Inc.		17,248		2,382,811
a	Revance Therapeutics Inc.		43,972		1,207,031
a	Seattle Genetics Inc.		12,500		829,875
a	Waters Corp.		18,300		3,542,697
	West Pharmaceutical Services Inc.		9,000		893,610

					53,241,829

	Industrials 18.2%
	Allegiant Travel Co.		9,426		1,309,743
	BWX Technologies Inc.		42,000		2,617,440
a	CoStar Group Inc.		18,335		7,565,571
	Fortive Corp.		52,500		4,048,275
	Heico Corp.		5,500		401,115
	Hexcel Corp.		65,234		4,330,233
	IDEX Corp.		22,200		3,029,856
a	IHS Markit Ltd.		107,515		5,546,699
	J.B. Hunt Transport Services Inc.		35,646		4,332,771
a	Mercury Systems Inc.		45,000		1,712,700
	Old Dominion Freight Line Inc.		19,000		2,830,240
	Republic Services Inc.		53,300		3,643,588
	Rockwell Automation Inc.		41,500		6,898,545
	Roper Technologies Inc.		40,743		11,241,401
	Stanley Black & Decker Inc.		29,296		3,890,802
	Textron Inc.		41,100		2,708,901
	TransUnion		12,000		859,680
a	Univar Inc.		115,800		3,038,592
a	Verisk Analytics Inc.		61,061		6,572,606
a	WABCO Holdings Inc.		28,300		3,311,666

					79,890,424

	Information Technology 31.3%
a	2U Inc.		105,079		8,780,401
a	Adyen NV (Netherlands)		1,400		771,637
a	Alarm.com Holdings Inc.		48,696		1,966,344
	Amphenol Corp., A		54,600		4,758,390
	Analog Devices Inc.		67,591		6,483,329
a	ANSYS Inc.		13,569		2,363,448


FSC-10		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments (Unaudited)


Franklin Small-Mid Cap Growth VIP Fund (continued)
		Shares		Value

	Common Stocks (continued)
	Information Technology (continued)
a	Arista Networks Inc.		4,000	$	1,029,960
a	Atlassian Corp. PLC (Australia)		28,182		1,761,939
a	Autodesk Inc.		50,800		6,659,372
a	Avalara Inc.		6,100		325,557
a	Black Knight Inc.		32,000		1,713,600
a	Ceridian HCM Holding Inc.		12,000		398,280
	Cognex Corp.		107,496		4,795,397
a	Coherent Inc.		6,500		1,016,730
	DXC Technology Co.		38,500		3,103,485
a	EPAM Systems Inc.		3,600		447,588
a	FleetCor Technologies Inc.		21,995		4,633,247
a	GoDaddy Inc., A		109,617		7,738,960
a	GreenSky Inc., A		43,700		924,255
a	Guidewire Software Inc.		31,000		2,752,180
a	I3 Verticals Inc., A		21,200		322,664
a	Inphi Corp.		75,000		2,445,750
a	Integrated Device Technology Inc.		88,140		2,809,903
a	InterXion Holding NV (Netherlands)		45,000		2,808,900
	KLA-Tencor Corp.		41,687		4,274,168
	Lam Research Corp.		26,916		4,652,431
	LogMeIn Inc.		28,500		2,942,625
	Marvell Technology Group Ltd. (Bermuda)		44,500		954,080
	Microchip Technology Inc.		72,227		6,569,046
	Monolithic Power Systems		24,100		3,221,447
a	Pluralsight Inc., A		19,000		464,550
a	PTC Inc.		9,500		891,195
a	Q2 Holdings Inc.		22,696		1,294,807
a	Red Hat Inc.		28,000		3,762,360
a	ServiceNow Inc.		47,437		8,181,459
	Skyworks Solutions Inc.		13,500		1,304,775
a	Square Inc., A		68,500		4,222,340
a	Synopsys Inc.		15,000		1,283,550
a	Trimble Inc.		22,500		738,900
a,d	ViaSat Inc.		57,366		3,770,094
a	Wix.com Ltd. (Israel)		32,000		3,209,600
a	Workday Inc., A		45,443		5,504,056
a	Worldpay Inc., A		94,534		7,730,990
	Xilinx Inc.		16,000		1,044,160
a,d	Zscaler Inc.		23,000		822,250

					137,650,199

	Materials 4.0%
	Albemarle Corp.		13,500		1,273,455
	Avery Dennison Corp.		28,500		2,909,850
a	Axalta Coating Systems Ltd.		117,707		3,567,699
a	Ingevity Corp.		34,641		2,801,071
	Packaging Corp. of America		27,000		3,018,330
	Vulcan Materials Co.		31,000		4,000,860

					17,571,265


		Semiannual Report		FSC-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)


		Shares		Value

	Common Stocks (continued)
	Real Estate 3.0%
a	CBRE Group Inc.		84,521	$	4,035,033
	Equinix Inc.		5,153		2,215,223
a	SBA Communications Corp., A		42,457		7,010,500

					13,260,756


	Total Common Stocks (Cost $285,891,283)				425,744,943

	Short Term Investments 4.4%
	Money Market Funds (Cost $14,063,833) 3.2%
e,f	Institutional Fiduciary Trust Money Market Portfolio, 1.51%		14,063,833		14,063,833

g	Investments from Cash Collateral Received for Loaned Securities (Cost $5,454,860) 1.2%
	Money Market Funds 1.2%
e,f	Institutional Fiduciary Trust Money Market Portfolio, 1.51%		5,454,860		5,454,860

	Total Investments (Cost $305,409,976) 101.3%				445,263,636
	Other Assets, less Liabilities (1.3)%				(5,774,942	)

	Net Assets 100.0%			$	439,488,694

^aNon-income producing.

^bFair valued using significant unobservable inputs. See Note 9 regarding fair value measurements.

^cSee Note 7 regarding restricted securities.

^dA portion or all of the security is on loan at June 30, 2018. See Note 1(c).

^eSee Note 3(e) regarding investments in affiliated management investment companies.

^fThe rate shown is the annualized seven-day effective yield at period end.

^gSee Note 1(c) regarding securities on loan.


FSC-12		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2018 (unaudited)


	Franklin Small-Mid Cap Growth VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	285,891,283
Cost - Non-controlled affiliates (Note 3e)		19,518,693

Value - Unaffiliated issuers ⁺	$	425,744,943
Value - Non-controlled affiliates (Note 3e)		19,518,693
Receivables:
Investment securities sold		268,818
Capital shares sold		209,266
Dividends and interest		134,037
Due from custodian		515,900
Other assets		295

Total assets		446,391,952

Liabilities:
Payables:
Capital shares redeemed.		359,196
Management fees		290,070
Distribution fees		173,201
Payable upon return of securities loaned		5,970,760
Accrued expenses and other liabilities		110,031

Total liabilities		6,903,258

Net assets, at value	$	439,488,694

Net assets consist of:
Paid-in capital	$	278,942,889
Undistributed net investment income (loss)		(994,830	)
Net unrealized appreciation (depreciation)		139,853,660
Accumulated net realized gain (loss)		21,686,975

Net assets, at value	$	439,488,694


Class 1:
Net assets, at value	$	38,473,380

Shares outstanding		2,025,665

Net asset value and maximum offering price per share	$	18.99


Class 2:
Net assets, at value	$	385,584,369

Shares outstanding		22,706,385

Net asset value and maximum offering price per share	$	16.98


Class 4:
Net assets, at value	$	15,430,945

Shares outstanding		874,414

Net asset value and maximum offering price per share	$	17.65

⁺Includes securities loaned	$	5,846,471


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FSC-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2018 (unaudited)


	Franklin Small-Mid Cap Growth VIP Fund
Investment income:
Dividends: (net of foreign taxes)*
Unaffiliated issuers	$	1,289,821
Non-controlled affiliates (Note 3e)		66,044
Income from securities loaned (net of fees and rebates)		27,249

Total investment income		1,383,114

Expenses:
Management fees (Note 3a)		1,776,558
Distribution fees: (Note 3c)
Class 2		488,369
Class 4		27,322
Custodian fees (Note 4)		1,798
Reports to shareholders		83,863
Professional fees		21,292
Trustees’ fees and expenses		1,143
Other		7,611

Total expenses		2,407,956
Expenses waived/paid by affiliates (Note 3e)		(30,012	)

Net expenses		2,377,944

Net investment income (loss)		(994,830	)

Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		22,128,871
Foreign currency transactions		(400	)

Net realized gain (loss)		22,128,471

Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		3,219,990

Net realized and unrealized gain (loss)		25,348,461

Net increase (decrease) in net assets resulting from operations	$	24,353,631

*Foreign taxes withheld on dividends	$	15


FSC-14		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets


	Franklin Small-Mid Cap Growth VIP Fund
	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income (loss)	$	(994,830	)	$	(2,151,916	)
Net realized gain (loss)		22,128,471			46,758,513
Net change in unrealized appreciation (depreciation)		3,219,990			44,201,889

Net increase (decrease) in net assets resulting from operations		24,353,631			88,808,486

Distributions to shareholders from:
Net realized gains:
Class 1		(3,540,738	)		(3,085,657	)
Class 2		(39,501,499	)		(39,960,537	)
Class 4		(1,517,449	)		(1,450,459	)

Total distributions to shareholders		(44,559,686	)		(44,496,653	)

Capital share transactions: (Note 2)
Class 1		3,058,630			1,442,945
Class 2		13,573,870			(41,878,699	)
Class 4		275,877			552,508

Total capital share transactions		16,908,377			(39,883,246	)

Net increase (decrease) in net assets		(3,297,678	)		4,428,587
Net assets:
Beginning of period		442,786,372			438,357,785

End of period	$	439,488,694		$	442,786,372

Undistributed net investment income (loss) included in net assets:
End of period	$	(994,830	)	$	—


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FSC-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Small-Mid Cap Growth VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eighteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Small-Mid Cap Growth VIP Fund (Fund) is included in this report. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. At June 30, 2018, 46.8% of the Fund’s shares were held through one insurance company. Investment activities of these insurance company separate accounts could have a material impact on the Fund. The Fund offers three classes of shares: Class 1, Class 2 and Class 4. Each class of shares may differ by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Investments in open-end mutual funds are valued at the closing NAV.


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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)

b. Foreign Currency Translation

c. Securities Lending

The Fund participates in an agency based securities lending program to earn additional income. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of Fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Fund. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned, net of fees paid to the securities lending agent and/or third-party vendor, is reported separately in the Statement of Operations. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower.

d. Income and Deferred Taxes


		Semiannual Report		FSC-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

d. Income and Deferred Taxes (continued)

to apply, the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

e. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

f. Accounting Estimates

g. Guarantees and Indemnifications


FSC-18		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 1 Shares:
Shares sold		60,491		$	1,244,530			111,735		$	2,131,300
Shares issued in reinvestment of distributions		179,278			3,540,738			170,856			3,085,657
Shares redeemed		(84,312	)		(1,726,638	)		(198,990	)		(3,774,012	)

Net increase (decrease)		155,457		$	3,058,630			83,601		$	1,442,945


Class 2 Shares:
Shares sold		319,605		$	5,945,455			683,937		$	11,660,672
Shares issued in reinvestment of distributions		2,236,778			39,501,499			2,442,575			39,960,537
Shares redeemed		(1,728,283	)		(31,873,084	)		(5,392,842	)		(93,499,908	)

Net increase (decrease)		828,100		$	13,573,870			(2,266,330	)	$	(41,878,699	)


Class 4 Shares:
Shares sold		54,667		$	1,045,847			145,506		$	2,584,438
Shares issued in reinvestment of distributions		82,695			1,517,449			85,574			1,450,459
Shares redeemed		(119,935	)		(2,287,419	)		(196,455	)		(3,482,389	)

Net increase (decrease)		17,427		$	275,877			34,625		$	552,508

3. Transactions with Affiliates


Subsidiary		Affiliation
Franklin Advisers, Inc. (Advisers)		Investment manager
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent


		Semiannual Report		FSC-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)

3. Transactions with Affiliates (continued)

a. Management Fees

The Fund pays an investment management fee to Advisers based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
0.800%		Up to and including $500 million
0.700%		Over $500 million, up to and including $1 billion
0.650%		Over $1 billion, up to and including $1.5 billion
0.600%		Over $1.5 billion, up to and including $6.5 billion
0.575%		Over $6.5 billion, up to and including $11.5 billion
0.550%		Over $11.5 billion, up to and including $16.5 billion
0.540%		Over $16.5 billion, up to and including $19 billion
0.530%		Over $19 billion, up to and including $21.5 billion
0.520%		In excess of $21.5 billion

For the period ended June 30, 2018, the annualized gross effective investment management fee rate was 0.800% of the Fund’s average daily net assets.

b. Administrative Fees

c. Distribution Fees

d. Transfer Agent Fees

Investor Services, under terms of an agreement, performs shareholder servicing for the Fund and is not paid by the Fund for the services.


FSC-20		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)

e. Investments in Affiliated Management Investment Companies

The Fund invests in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the affiliated management investment companies, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. Prior to January 1, 2014, the waiver was accounted for as a reduction to management fees. During the period ended June 30, 2018, the Fund held investments in affiliated management investment companies as follows:


	Number of Shares Held at Beginning of Period		Gross Additions		Gross Reductions			Number of Shares Held at End of Period		Value at End of Period		Dividend Income		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 1.51%		15,691,885		81,989,174		(78,162,366	)		19,518,693		$19,518,693		$66,044		$ —		$ —

f. Interfund Transactions

4. Expense Offset Arrangement

The Fund has entered into an arrangement with their custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2018, there were no credits earned.

5. Income Taxes

At June 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


Cost of investments	$305,848,678

Unrealized appreciation	$146,524,930
Unrealized depreciation	(7,109,972	)

Net unrealized appreciation (depreciation)	$139,414,958

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of pass-through entity income and wash sales.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2018, aggregated $60,242,709 and $95,353,163, respectively.

At June 30, 2018, in connection with securities lending transactions, the Fund loaned equity investments and received $5,970,760 of cash collateral. The gross amount of recognized liability for such transactions is included in payable upon return of securities loaned in the Statement of Assets and Liabilities. The agreements can be terminated at any time.


		Semiannual Report		FSC-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)

7. Restricted Securities

At June 30, 2018, investments in restricted securities, excluding securities exempt from registration under the 1933 Act deemed to be liquid, were as follows:


Shares	Issuer	Acquisition Date		Cost		Value
733,541	DraftKings Inc. (Value is 0.4% of Net Assets)		8/07/15	$	2,800,003	$	1,621,649

8. Credit Facility

9. Fair Value Measurements

•

Level 1 – quoted prices in active markets for identical financial instruments

•

Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

•

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.


FSC-22		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)

A summary of inputs used as of June 30, 2018, in valuing the Fund’s assets carried at fair value, is as follows:


	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:^a
Equity Investments:
Consumer Discretionary	$	64,120,362	$	—	$	1,621,649	$	65,742,011
All Other Equity Investments		360,002,932		—		—		360,002,932
Short Term Investments		19,518,693		—		—		19,518,693

Total Investments in Securities	$	443,641,987	$	—	$	1,621,649	$	445,263,636

^aFor detailed categories, see the accompanying Statement of Investments.

A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the beginning and/or end of the period.

10. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.


		Semiannual Report		FSC-23

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Franklin Strategic Income VIP Fund

This semiannual report for Franklin Strategic Income VIP Fund covers the period ended June 30, 2018.

Class 1 Performance Summary as of June 30, 2018

The Fund’s Class 1 Shares had a -1.36% total return*,** for the six-month period ended June 30, 2018.

*The Fund has a fee waiver associated with any investment it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through 4/30/19. Fund investment results reflect the fee waiver; without this waiver, the results would have been lower. **Total return information is based on asset values calculated for shareholder transactions. Certain adjustments were made to the net assets of the Fund at 12/31/17 for financial reporting purposes, and as a result, the total returns based on those net asset values differ from the adjusted total returns reported in the Financial Highlights.


		Semiannual Report		FSI-1

FRANKLIN STRATEGIC INCOME VIP FUND

Fund Goal and Main Investments

The Fund seeks a high level of current income, with capital appreciation over the long term as a secondary goal. Under normal market conditions, the Fund invests primarily to predominantly in US and foreign debt securities, including those in emerging markets.

Fund Risks

All investments involve risks, including possible loss of principal. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. High yields reflect the higher credit risks associated with certain lower rated securities held in the portfolio. Floating rate loans and high yield corporate bonds are rated below investment grade and are subject to greater risk of default, which could result in loss of principal—a risk that may be heightened in a slowing economy. The risks of foreign securities include currency fluctuations and political uncertainty. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with their relatively small size and lesser liquidity. Investing in derivative securities and the use of foreign currency techniques involve special risks as such may not achieve the anticipated benefits and/or may result in losses to the Fund. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. For comparison, the Fund’s benchmark, the Bloomberg Barclays US Aggregate Index, had a -1.62% total return for the period under review.¹ The Fund’s peers, as measured by the Lipper Multi-Sector Income Funds Classification Average, had a -1.18% return.²

Economic and Market Overview

The US economy continued to grow during the six months under review. After moderating for three consecutive quarters,

the economy grew faster in 2018’s second quarter, driven by consumer spending, exports, business investment and government spending. The unemployment rate declined slightly from 4.1% in December 2017, as reported at the beginning of the six-month period, to 4.0% at period-end.³ Annual inflation, as measured by the Consumer Price Index, increased from 2.1% in December 2017, as reported at the beginning of the period, to 2.9% at period-end.³

Investment Strategy

We allocate our investments among the various types of debt available based on our assessment of changing economic, global market, industry and issuer conditions. We use a top-down analysis of macroeconomic trends, combined with a bottom-up fundamental analysis of market sectors, industries

1. Source: Morningstar.

2. Source: Lipper, a Thomson Reuters Company.

One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

3. Source: Bureau of Labor Statistics.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).


FSI-2		Semiannual Report

FRANKLIN STRATEGIC INCOME VIP FUND

and issuers, seeking to take advantage of varying sector reactions to economic events. For example, we may evaluate business cycles, yield curves, country risk, and the relative interest rates among currencies, and values between and within markets. In selecting debt securities, we generally conduct our own analysis of the security’s intrinsic value rather than simply relying on the coupon rate or rating. We may also enter into various transactions involving certain currency-, interest rate-or credit-related derivative instruments.

What is the yield curve?

A yield curve is a line that plots the yield to maturity of bonds having equal credit quality against their maturity dates.

Manager’s Discussion

The Fund allocated assets across the broad fixed income markets. During the period, we maintained large allocations to spread sectors, primarily high-yield corporate credit, with smaller exposures to senior secured floating rate loans and investment-grade corporate bonds. The Fund also held positions in select non-US dollar global government bonds and securitized sectors. Additionally, the Fund sought to maintain a relatively defensive positioning to US interest rates.

The Fund’s exposure to sovereign emerging-market securities was the most significant contributor to performance. Non-dollar developed securities, tax-exempt municipal bonds, senior secured floating rate loans and non-agency residential mortgage-backed securities were all additive to performance. In addition, US dollar yield curve positioning boosted absolute returns.

In contrast, our currency exposures had a significant negative impact on returns. Additionally, exposure to high yield corporate credit, investment-grade corporate bonds and fixed-rate agency mortgage-backed securities detracted from performance.

The Fund utilized derivatives, including credit default swaps, currency forwards and government bond futures, primarily as a tool for efficient portfolio management and to manage overall portfolio risk. These derivative transactions may provide the same, or similar, net long or short exposure to select currencies, interest rates, countries, duration or credit risks compared to holding securities.


Portfolio Composition* Based on Consolidated Net Assets
	6/30/18		12/31/17
High-Yield Corporate Bonds		31.96%		29.82%
Floating-Rate Loans		17.86%		16.10%
Investment-Grade Corporate Bonds		16.56%		17.60%
International Government & Agency Bonds		10.21%		9.07%
Agency Mortgage-Backed Securities		9.14%		9.90%
Collateralized Loan Obligations		6.08%		4.00%
Residential Mortgage-Backed Securities		5.27%		3.10%
U.S. Treasury Securities		4.24%		4.10%
Other		2.89%		0.90%
Commercial Mortgage-Backed Securities		2.36%		2.40%
Treasury-Inflation Protected Securities		2.03%		2.80%
Asset-Backed Securities		1.98%		2.10%
Municipal Bonds		1.47%		0.90%
Short Term Investments & Other Net Assets		-4.87%		-2.80%

*Figures reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors. The composition may not match the Statement of Investments (SOI).

What is a currency forward?

A currency forward is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date.

What is a credit derivative?

A credit derivative is a contract agreement between the Fund and a counterparty that is principally used by the Fund to gain or increase exposure to certain financial assets and/or to hedge against credit risk.

What is meant by “hedge”?

To hedge an investment is to take a position intended to offset potential losses/gains that may be incurred by a companion financial instrument.

Thank you for your participation in Franklin Strategic Income VIP Fund. We look forward to serving your future investment needs.


		Semiannual Report		FSI-3

FRANKLIN STRATEGIC INCOME VIP FUND


FSI-4		Semiannual Report

FRANKLIN STRATEGIC INCOME VIP FUND

Class 1 Fund Expenses

Actual Fund Expenses

The table below provides information about the actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of ongoing Fund expenses but does not include the effect of ongoing Contract expenses, is used to calculate the “Ending Account Value.” You can estimate the Fund-level expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number under the headings “Actual” and “Fund-Level Expenses Paid During Period” (if Fund-Level Expenses Paid During Period were $ 7.50, then 8.6 × $7.50 = $64.50). In this illustration, the estimated expenses paid this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Actual
(actual return after expenses)

Hypothetical
(5% annual return before expenses)

Share

Class

Beginning Account

Value 1/1/18

Ending Account

Value 6/30/18

Fund-Level

Expenses Paid

During Period

1/1/18–6/30/18^1,2

Ending Account

Value 6/30/18

Fund-Level

Expenses Paid

During Period

1/1/18–6/30/18^1,2

Net

Annualized

Expense

Ratio²

Class 1

$1,000

$989.10

$3.06

$1,021.72

$3.11

0.62%

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above — in the far right column — multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include any ongoing expenses of the Contract for which the Fund is an investment option or acquired fund fees and expenses.


		Semiannual Report		FSI-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Consolidated Financial Highlights

Franklin Strategic Income VIP Fund


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 1
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$11.15			$11.01			$10.55			$11.90			$12.64			$13.17


Income from investment operations^a:

Net investment income^b		0.23			0.45			0.48			0.53			0.54			0.59

Net realized and unrealized gains (losses)		(0.35	)		0.04			0.37			(0.91	)		(0.25	)		(0.15	)

Total from investment operations		(0.12	)		0.49			0.85			(0.38	)		0.29			0.44


Less distributions from:

Net investment income and net foreign currency gains		(0.32	)		(0.35	)		(0.39	)		(0.77	)		(0.78	)		(0.80	)

Net realized gains		—			—			—			(0.20	)		(0.25	)		(0.17	)

Total distributions		(0.32	)		(0.35	)		(0.39	)		(0.97	)		(1.03	)		(0.97	)

Net asset value, end of period		$10.71			$11.15			$11.01			$10.55			$11.90			$12.64


Total return^c		(1.09	)%		4.46%			8.25%			(3.62)%			2.12%			3.52%

Ratios to average net assets^d

Expenses before waiver and payments by affiliates		0.67%			0.68%			0.67%			0.63%			0.63%			0.60%

Expenses net of waiver and payments by affiliates^e		0.62%			0.63%			0.60%			0.62%			0.62%			0.60%

Net investment income		4.17%			4.00%			4.42%			4.71%			4.34%			4.58%

Supplemental data

Net assets, end of period (000’s)		$333,801			$361,465			$396,170			$441,658			$574,850			$705,493

Portfolio turnover rate		62.81%			108.73%			128.51%			85.85%			55.64%			48.06%

Portfolio turnover rate excluding mortgage dollar rolls^f		30.03%			48.11%			77.93%			51.47%			48.86%			47.01%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Consolidated Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fSee Note 1(h) regarding mortgage dollar rolls.


FSI-6		Semiannual Report \| The accompanying notes are an integral part of these consolidated financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED FINANCIAL HIGHLIGHTS

Franklin Strategic Income VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 2
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$10.76			$10.64			$10.21			$11.55			$12.30			$12.84


Income from investment operations^a:

Net investment income^b		0.21			0.40			0.43			0.49			0.49			0.54

Net realized and unrealized gains (losses)		(0.33	)		0.04			0.36			(0.89	)		(0.24	)		(0.13	)

Total from investment operations		(0.12	)		0.44			0.79			(0.40	)		0.25			0.41


Less distributions from:

Net investment income and net foreign currency gains		(0.29	)		(0.32	)		(0.36	)		(0.74	)		(0.75	)		(0.78	)

Net realized gains		—			—			—			(0.20	)		(0.25	)		(0.17	)

Total distributions		(0.29	)		(0.32	)		(0.36	)		(0.94	)		(1.00	)		(0.95	)

Net asset value, end of period		$10.35			$10.76			$10.64			$10.21			$11.55			$12.30


Total return^c		(1.10	)%		4.17%			7.94%			(3.87)%			1.86%			3.32%

Ratios to average net assets^d

Expenses before waiver and payments by affiliates		0.92%			0.93%			0.92%			0.88%			0.88%			0.85%

Expenses net of waiver and payments by affiliates^e		0.87%			0.88%			0.85%			0.87%			0.87%			0.85%

Net investment income		3.92%			3.75%			4.17%			4.46%			4.09%			4.33%

Supplemental data

Net assets, end of period (000’s)		$208,250			$214,271			$203,418			$202,192			$206,571			$175,307

Portfolio turnover rate		62.81%			108.73%			128.51%			85.85%			55.64%			48.06%

Portfolio turnover rate excluding mortgage dollar rolls^f		30.03%			48.11%			77.93%			51.47%			48.86%			47.01%

^bBased on average daily shares outstanding.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fSee Note 1(h) regarding mortgage dollar rolls.


		The accompanying notes are an integral part of these consolidated financial statements. \| Semiannual Report		FSI-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED FINANCIAL HIGHLIGHTS

Franklin Strategic Income VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 4
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$11.04			$10.90			$10.44			$11.78			$12.51			$13.04


Income from investment operations^a:

Net investment income^b		0.21			0.40			0.43			0.49			0.49			0.54

Net realized and unrealized gains (losses)		(0.34	)		0.04			0.38			(0.91	)		(0.25	)		(0.14	)

Total from investment operations		(0.13	)		0.44			0.81			(0.42	)		0.24			0.40


Less distributions from:

Net investment income and net foreign currency gains		(0.27	)		(0.30	)		(0.35	)		(0.72	)		(0.72	)		(0.76	)

Net realized gains		—			—			—			(0.20	)		(0.25	)		(0.17	)

Total distributions		(0.27	)		(0.30	)		(0.35	)		(0.92	)		(0.97	)		(0.93	)

Net asset value, end of period		$10.64			$11.04			$10.90			$10.44			$11.78			$12.51


Total return^c		(1.14	)%		4.08%			7.86%			(3.98)%			1.75%			3.17%

Ratios to average net assets^d

Expenses before waiver and payments by affiliates		1.02%			1.03%			1.02%			0.98%			0.98%			0.95%

Expenses net of waiver and payments by affiliates^e		0.97%			0.98%			0.95%			0.97%			0.97%			0.95%

Net investment income		3.82%			3.65%			4.07%			4.36%			3.99%			4.23%

Supplemental data

Net assets, end of period (000’s)		$66,630			$74,013			$80,175			$92,965			$113,986			$134,970

Portfolio turnover rate		62.81%			108.73%			128.51%			85.85%			55.64%			48.06%

Portfolio turnover rate excluding mortgage dollar rolls^f		30.03%			48.11%			77.93%			51.47%			48.86%			47.01%

^bBased on average daily shares outstanding.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fSee Note 1(h) regarding mortgage dollar rolls.


FSI-8		Semiannual Report \| The accompanying notes are an integral part of these consolidated financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Consolidated Statement of Investments, June 30, 2018 (unaudited)

Franklin Strategic Income VIP Fund

Country

Shares/ Warrants

Value

Common Stocks and Other Equity Interests 0.4%

Consumer Services 0.1%

a,aa,ab

Turtle Bay Resort

United States

1,901,449

343,871

Energy 0.3%

Birch Permian Holdings Inc.

United States

99,812

1,197,744

Energy XXI Gulf Coast Inc., wts., 12/30/21

United States

4,009

Halcon Resources Corp.

United States

97,655

428,706

Halcon Resources Corp., wts., 9/09/20

United States

8,155

3,384

Linn Energy Inc.

United States

8,565

331,037

Midstates Petroleum Co. Inc.

United States

698

9,500

a,ab

Midstates Petroleum Co. Inc., wts., 4/21/20

United States

4,955

132

1,970,543

Materials 0.0%^†

Verso Corp., A

United States

6,954

151,319

Verso Corp., wts., 7/25/23

United States

732

2,818

154,137

Retailing 0.0%^†

a,ab,b

K2016470219 South Africa Ltd., A

South Africa

14,792,309

10,788

a,ab,b

K2016470219 South Africa Ltd., B

South Africa

1,472,041

1,074

11,862

Transportation 0.0%^†

a,ab

CEVA Logistics AG

Switzerland

7,190

161,881

Total Common Stocks and Other Equity Interests
(Cost $8,795,992)

2,642,294

Management Investment Companies 6.5%

Diversified Financials 6.5%

Franklin Lower Tier Floating Rate Fund

United States

2,081,861

20,423,054

Franklin Middle Tier Floating Rate Fund

United States

2,024,951

19,135,791

Total Management Investment Companies
(Cost $40,585,221)

39,558,845

Principal Amount*

Corporate Bonds 47.6%

Automobiles & Components 0.5%

Fiat Chrysler Automobiles NV, senior note, 5.25%, 4/15/23

United Kingdom

1,200,000

1,211,040

The Goodyear Tire & Rubber Co.,

senior bond, 5.00%, 5/31/26

United States

1,800,000

1,680,750

senior note, 5.125%, 11/15/23

United States

400,000

397,400

3,289,190

Banks 4.4%

Bank of America Corp.,

United States

800,000

746,164

senior bond, 3.248%, 10/21/27

senior note, 3.50%, 4/19/26

United States

4,800,000

4,646,010

CIT Group Inc., senior bond, 5.00%, 8/15/22

United States

2,058,000

2,086,298

Citigroup Inc.,

senior note, 3.30%, 4/27/25

United States

300,000

287,971

senior note, 3.40%, 5/01/26

United States

3,100,000

2,946,140

senior note, 3.20%, 10/21/26

United States

3,000,000

2,794,374


		Semiannual Report			FSI-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Principal Amount*			Value
	Corporate Bonds (continued)
	Banks (continued)
	Citigroup Inc., (continued)
	sub. bond, 5.50%, 9/13/25		United States		500,000		$	531,481
	sub. note, 4.05%, 7/30/22		United States		300,000			301,814
d	ICICI Bank Ltd./Dubai, senior note, 144A, 3.80%, 12/14/27		India		1,600,000			1,463,168
	JPMorgan Chase & Co.,
e	junior sub. bond, R, 6.00% to 8/01/23, FRN thereafter, Perpetual		United States		1,500,000			1,535,625
e	junior sub. bond, X, 6.10% to 10/01/24, FRN thereafter, Perpetual		United States		500,000			516,925
	senior bond, 3.30%, 4/01/26		United States		400,000			382,766
	senior bond, 3.20%, 6/15/26		United States		1,500,000			1,419,361
	sub. note, 3.375%, 5/01/23		United States		1,000,000			977,018
	sub. note, 3.875%, 9/10/24		United States		1,000,000			991,121
	Royal Bank of Scotland Group PLC, sub. note, 5.125%, 5/28/24		United Kingdom		500,000			504,843
f	Turkiye Vakiflar Bankasi TAO, secured note, Reg S, 2.375%, 11/04/22		Turkey		500,000	EUR		578,868
	Wells Fargo & Co.,
e	junior sub. bond, S, 5.90% to 6/15/24, FRN thereafter, Perpetual		United States		1,500,000			1,506,825
	senior note, 3.00%, 4/22/26		United States		2,500,000			2,326,183

								26,542,955

	Capital Goods 1.6%
	Aircastle Ltd., senior note, 4.125%, 5/01/24		United States		2,600,000			2,496,260
d	Beacon Roofing Supply Inc., senior note, 144A, 4.875%, 11/01/25		United States		1,600,000			1,488,000
	CNH Industrial NV, senior bond, 3.85%, 11/15/27		United Kingdom		700,000			651,627
	General Electric Co., senior bond, 4.50%, 3/11/44		United States		200,000			196,372
	Legrand France SA, senior bond, 8.50%, 2/15/25		France		100,000			125,471
	Tennant Co., senior note, 5.625%, 5/01/25		United States		1,000,000			997,500
d	Terex Corp., senior note, 144A, 5.625%, 2/01/25		United States		2,000,000			1,992,500
d	Vertiv Group Corp., senior note, 144A, 9.25%, 10/15/24		United States		1,600,000			1,576,000

								9,523,730

	Commercial & Professional Services 0.8%
d	IHS Markit Ltd., senior note, 144A, 4.00%, 3/01/26		United States		1,200,000			1,140,000
	United Rentals North America Inc., senior bond, 5.875%, 9/15/26		United States		1,600,000			1,618,000
d	West Corp., senior note, 144A, 8.50%, 10/15/25		United States		2,500,000			2,293,750

								5,051,750

	Consumer Durables & Apparel 1.3%
d	Hanesbrands Inc., senior bond, 144A, 4.875%, 5/15/26		United States		2,700,000			2,619,000
	KB Home,
	senior note, 4.75%, 5/15/19		United States		1,000,000			1,009,100
	senior note, 7.00%, 12/15/21		United States		1,200,000			1,266,000
	PulteGroup Inc., senior bond, 5.00%, 1/15/27		United States		2,000,000			1,907,500
	Toll Brothers Finance Corp., senior bond, 5.625%, 1/15/24		United States		1,100,000			1,137,125

								7,938,725

	Consumer Services 2.4%
d	1011778 BC ULC/New Red Finance Inc.,
	secured note, second lien, 144A, 5.00%, 10/15/25		Canada		1,200,000			1,141,440
	senior secured note, first lien, 144A, 4.25%, 5/15/24		Canada		900,000			857,250


FSI-10		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Principal Amount*			Value
	Corporate Bonds (continued)
	Consumer Services (continued)
d	Golden Nugget Inc., senior note, 144A, 6.75%, 10/15/24		United States		1,400,000		$	1,403,752
d	International Game Technology PLC, senior secured bond, 144A, 6.50%, 2/15/25		United States		3,300,000			3,423,750
d	KFC Holding Co./Pizza Hut Holdings LLC/Taco Bell of America LLC,
	senior note, 144A, 5.00%, 6/01/24		United States		900,000			890,730
	senior note, 144A, 5.25%, 6/01/26		United States		1,300,000			1,283,750
	Marriott International Inc., senior bond, 3.75%, 10/01/25		United States		2,800,000			2,749,075
	MGM Resorts International, senior note, 6.75%, 10/01/20		United States		200,000			210,000
d,g	Stars Group Holdings BV/Stars Group US Co-Borrower LLC, senior note, 144A, 7.00%, 7/15/26		Canada		700,000			709,187
d	Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., senior bond, 144A, 5.50%, 3/01/25		United States		1,200,000			1,182,000
d	Wynn Macau Ltd., senior note, 144A, 4.875%, 10/01/24		Macau		1,000,000			957,920

								14,808,854

	Diversified Financials 2.6%
	Capital One Financial Corp., senior note, 3.20%, 2/05/25		United States		2,000,000			1,879,755
	The Goldman Sachs Group Inc.,
	senior note, 3.50%, 1/23/25		United States		3,000,000			2,898,713
	senior note, 3.75%, 2/25/26		United States		1,500,000			1,455,255
d	Lincoln Finance Ltd., senior secured note, 144A, 6.875%, 4/15/21		Netherlands		600,000	EUR		725,665
	Morgan Stanley,
	senior bond, 3.591% to 7/22/27, FRN thereafter, 7/22/28		United States		1,000,000			951,169
	senior note, 3.875%, 1/27/26		United States		4,200,000			4,136,973
	Navient Corp.,
	senior note, 6.625%, 7/26/21		United States		800,000			823,760
	senior note, 7.25%, 9/25/23		United States		2,500,000			2,631,250
	senior note, 6.125%, 3/25/24		United States		500,000			496,250

								15,998,790

	Energy 5.0%
	Anadarko Petroleum Corp.,
	senior bond, 3.45%, 7/15/24		United States		100,000			96,455
	senior bond, 7.95%, 6/15/39		United States		100,000			131,819
	Apache Corp., senior bond, 2.625%, 1/15/23		United States		1,900,000			1,804,621
d	BG Energy Capital PLC, senior bond, 144A, 5.125%, 10/15/41		United Kingdom		100,000			111,226
d	California Resources Corp., secured note, second lien, 144A, 8.00%, 12/15/22		United States		716,000			653,350
	Cheniere Corpus Christi Holdings LLC,
	senior secured note, first lien, 7.00%, 6/30/24		United States		800,000			875,000
	senior secured note, first lien, 5.875%, 3/31/25		United States		700,000			730,625
d	Cheniere Energy Partners LP, senior secured note, first lien, 144A, 5.25%, 10/01/25		United States		1,200,000			1,173,540
	CNOOC Finance 2015 USA LLC, senior note, 3.50%, 5/05/25		China		1,300,000			1,255,384
	CONSOL Energy Inc., senior note, 5.875%, 4/15/22		United States		2,500,000			2,519,225
	Energy Transfer Equity LP, senior note, first lien, 7.50%, 10/15/20		United States		1,900,000			2,030,625
	Energy Transfer Partners LP, senior note, 5.20%, 2/01/22		United States		1,000,000			1,037,889
	Energy Transfer Partners LP/Regency Energy Finance Corp.,
	senior note, 5.875%, 3/01/22		United States		200,000			211,683
	senior note, 5.00%, 10/01/22		United States		500,000			518,033


		Semiannual Report			FSI-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Energy (continued)
d,h	EnQuest PLC, senior note, 144A, PIK, 7.00%, 4/15/22		United Kingdom		1,262,556	$	1,133,967
	Enterprise Products Operating LLC, senior bond, 6.125%, 10/15/39		United States		100,000		114,441
d,i	Gaz Capital SA, (OJSC Gazprom), loan participation, senior note, 144A, 3.85%, 2/06/20		Russia		1,500,000		1,504,133
	Kinder Morgan Inc.,
	senior bond, 4.30%, 6/01/25		United States		2,000,000		1,992,489
	senior note, 3.15%, 1/15/23		United States		1,500,000		1,449,100
	Martin Midstream Partners LP/Martin Midstream Finance Corp., senior note, 7.25%, 2/15/21		United States		2,000,000		1,985,000
	Oceaneering International Inc., senior note, 4.65%, 11/15/24		United States		200,000		191,232
	Sabine Pass Liquefaction LLC,
	senior secured note, first lien, 5.625%, 2/01/21		United States		2,000,000		2,092,756
	senior secured note, first lien, 5.625%, 4/15/23		United States		900,000		955,537
	Sanchez Energy Corp., senior note, 6.125%, 1/15/23		United States		300,000		204,750
d	Sinopec Group Overseas Development 2016 Ltd., senior note, 144A, 2.75%, 9/29/26		China		1,300,000		1,170,280
d	Sunoco LP/Sunoco Finance Corp., senior note, 144A, 4.875%, 1/15/23		United States		600,000		577,500
d,h	W&T Offshore Inc.,
	secured note, second lien, 144A, PIK, 9.00%, 5/15/20		United States		499,995		501,245
	senior secured note, third lien, 144A, PIK, 10.00%, 6/15/21		United States		453,003		430,146
	Weatherford International Ltd.,
	senior note, 7.75%, 6/15/21		United States		800,000		826,000
	senior note, 8.25%, 6/15/23		United States		1,000,000		994,590
d	Woodside Finance Ltd.,
	senior bond, 144A, 3.70%, 3/15/28		Australia		800,000		759,856
	senior note, 144A, 3.70%, 9/15/26		Australia		500,000		481,133

							30,513,630

	Food & Staples Retailing 0.9%
d	Aramark Services Inc., senior bond, 144A, 5.00%, 2/01/28		United States		800,000		766,000
	Kroger Co., senior bond, 2.65%, 10/15/26		United States		1,400,000		1,241,165
	Walgreens Boots Alliance Inc., senior note, 3.80%, 11/18/24		United States		3,200,000		3,145,960

							5,153,125

	Food, Beverage & Tobacco 1.4%
	Bunge Ltd. Finance Corp., senior note, 3.25%, 8/15/26		United States		200,000		182,800
	Coca-Cola Femsa SAB de CV, senior bond, 5.25%, 11/26/43		Mexico		200,000		224,125
d	Imperial Brands Finance PLC, senior note, 144A, 3.50%, 2/11/23		United Kingdom		2,100,000		2,053,745
d	JBS USA LLC/Finance Inc., senior note, 144A, 5.75%, 6/15/25		United States		500,000		467,500
	Kraft Heinz Foods Co., senior bond, 3.00%, 6/01/26		United States		2,400,000		2,164,235
d	Lamb Weston Holdings Inc.,
	senior note, 144A, 4.625%, 11/01/24		United States		600,000		586,500
	senior note, 144A, 4.875%, 11/01/26		United States		1,400,000		1,365,000
d	Post Holdings Inc.,
	senior bond, 144A, 5.625%, 1/15/28		United States		500,000		470,625
	senior note, 144A, 5.50%, 3/01/25		United States		1,000,000		978,750
	Reynolds American Inc., senior note, 4.45%, 6/12/25		United Kingdom		200,000		201,290

							8,694,570


FSI-12		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Health Care Equipment & Services 2.6%
d	Avantor Inc., senior secured note, first lien, 144A, 6.00%, 10/01/24		United States		2,000,000	$	1,983,400
	Centene Corp., senior note, 4.75%, 5/15/22		United States		1,700,000		1,719,125
d	Centene Escrow I Corp., senior note, 144A, 5.375%, 6/01/26		United States		600,000		609,378
	CHS/Community Health Systems Inc.,
	senior note, 6.875%, 2/01/22		United States		349,000		179,735
d	senior note, 144A, 8.125%, 6/30/24		United States		38,000		31,588
	senior secured note, first lien, 6.25%, 3/31/23		United States		500,000		460,000
	CVS Health Corp., senior bond, 4.30%, 3/25/28		United States		1,000,000		987,960
	DaVita Inc.,
	senior bond, 5.125%, 7/15/24		United States		500,000		485,938
	senior bond, 5.00%, 5/01/25		United States		900,000		849,375
	senior note, 5.75%, 8/15/22		United States		1,500,000		1,526,258
	Edwards Lifesciences Corp., senior note, 4.30%, 6/15/28		United States		300,000		299,995
	HCA Inc.,
	senior bond, 5.875%, 5/01/23		United States		1,500,000		1,560,000
	senior secured bond, first lien, 5.875%, 3/15/22		United States		450,000		470,250
	senior secured bond, first lien, 5.25%, 4/15/25		United States		600,000		601,500
	senior secured bond, first lien, 5.50%, 6/15/47		United States		1,200,000		1,104,000
d	MPH Acquisition Holdings LLC, senior note, 144A, 7.125%, 6/01/24		United States		900,000		924,750
d,h	Polaris Intermediate Corp., senior note, 144A, PIK, 8.50%, 12/01/22		United States		200,000		207,000
	Stryker Corp., senior bond, 3.50%, 3/15/26		United States		500,000		486,089
	Tenet Healthcare Corp.,
	senior note, 5.50%, 3/01/19		United States		300,000		304,500
	senior note, 8.125%, 4/01/22		United States		1,000,000		1,047,500

							15,838,341

	Insurance 0.6%
d	Nippon Life Insurance Co., sub. bond, 144A, 5.10% to 10/16/24, FRN thereafter, 10/16/44		Japan		3,500,000		3,572,765

	Materials 6.2%
	ArcelorMittal,
	senior note, 5.50%, 3/01/21		France		1,800,000		1,879,002
	senior note, 6.125%, 6/01/25		France		300,000		323,531
d	Ardagh Packaging Finance PLC/Ardagh MP Holdings USA Inc.,
	senior note, 144A, 6.00%, 6/30/21		Luxembourg		1,300,000		1,319,500
	senior note, 144A, 6.00%, 2/15/25		Luxembourg		900,000		877,500
d	BWAY Holding Co., senior note, 144A, 7.25%, 4/15/25		United States		2,700,000		2,639,250
d	Cemex Finance LLC, senior secured note, first lien, 144A, 6.00%, 4/01/24		Mexico		1,000,000		1,016,795
d	Cemex SAB de CV, senior secured bond, first lien, 144A, 5.70%, 1/11/25		Mexico		1,500,000		1,482,960
	The Chemours Co., senior note, 6.625%, 5/15/23		United States		1,035,000		1,086,750
d	Crown Americas LLC/Crown Americas Capital Corp., senior note, 144A, 4.75%, 2/01/26		United States		700,000		666,750
d	First Quantum Minerals Ltd.,
	senior note, 144A, 7.00%, 2/15/21		Zambia		625,000		632,422
	senior note, 144A, 7.25%, 4/01/23		Zambia		1,600,000		1,604,000
d	FMG Resources (August 2006) Pty. Ltd.,
	senior note, 144A, 5.125%, 3/15/23		Australia		400,000		398,000
	senior note, 144A, 5.125%, 5/15/24		Australia		800,000		780,248
	Freeport-McMoRan Inc., senior note, 4.55%, 11/14/24		United States		2,500,000		2,387,500
d	Glencore Finance Canada Ltd., senior bond, 144A, 4.95%, 11/15/21		Switzerland		1,000,000		1,038,702


		Semiannual Report			FSI-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Materials (continued)
d	Glencore Funding LLC,
	senior note, 144A, 4.125%, 5/30/23		Switzerland		600,000	$	599,345
	senior note, 144A, 4.625%, 4/29/24		Switzerland		250,000		251,887
d	INVISTA Finance LLC,
	senior secured note, 144A, 4.25%, 10/15/19		United States		3,000,000		3,016,500
	LYB International Finance BV, senior note, 4.00%, 7/15/23		United States		2,100,000		2,107,886
d	New Gold Inc., senior note, 144A, 6.375%, 5/15/25		Canada		700,000		691,250
d	Northwest Acquisitions ULC/Dominion Finco Inc., secured note, second lien, 144A, 7.125%, 11/01/22		Canada		400,000		400,000
d	Novelis Corp., senior bond, 144A, 5.875%, 9/30/26		United States		2,300,000		2,208,000
d	Owens-Brockway Glass Container Inc.,
	senior note, 144A, 5.00%, 1/15/22		United States		1,400,000		1,400,000
	senior note, 144A, 5.875%, 8/15/23		United States		700,000		710,500
	Reynolds Group Issuer Inc./Reynolds Group Issuer LLC/Reynolds Group Issuer Luxembourg SA,
d	senior note, 144A, 7.00%, 7/15/24		United States		500,000		511,563
	senior secured note, first lien, 5.75%, 10/15/20		United States		678,376		681,767
d	senior secured note, first lien, 144A, 5.125%, 7/15/23		United States		700,000		692,125
d	Sealed Air Corp.,
	senior bond, 144A, 5.125%, 12/01/24		United States		1,000,000		1,012,500
	senior bond, 144A, 5.50%, 9/15/25		United States		400,000		412,000
	senior note, 144A, 4.875%, 12/01/22		United States		1,000,000		1,013,750
	Steel Dynamics Inc.,
	senior bond, 5.50%, 10/01/24		United States		1,000,000		1,021,250
	senior note, 5.125%, 10/01/21		United States		1,000,000		1,011,250
d	SunCoke Energy Partners LP/SunCoke Energy Partners Finance Corp., senior note, 144A, 7.50%, 6/15/25		United States		2,000,000		2,045,000

							37,919,483

	Media 4.9%
d	Altice Financing SA, secured bond, 144A, 7.50%, 5/15/26		Luxembourg		200,000		193,500
d	Altice U.S. Finance I Corp., senior secured bond, 144A, 5.50%, 5/15/26		United States		2,200,000		2,128,500
	AMC Networks Inc., senior note, 5.00%, 4/01/24		United States		2,000,000		1,975,000
	CCO Holdings LLC/CCO Holdings Capital Corp.,
	senior bond, 5.25%, 9/30/22		United States		1,100,000		1,107,562
d	senior bond, 144A, 5.375%, 5/01/25		United States		900,000		873,000
	Clear Channel Worldwide Holdings Inc.,
	senior note, 6.50%, 11/15/22		United States		1,000,000		1,025,000
	senior sub. note, 7,625%, 3/15/20		United States		700,000		698,395
	CSC Holdings LLC, senior note, 6.75%, 11/15/21		United States		2,000,000		2,100,000
	DISH DBS Corp.,
	senior bond, 5.875%, 7/15/22		United States		500,000		471,875
	senior note, 6.75%, 6/01/21		United States		500,000		501,875
	senior note, 5.875%, 11/15/24		United States		1,200,000		1,020,000
^ji	HeartCommunications Inc.,
	senior secured bond, first lien, 9.00%, 3/01/21		United States		600,000		459,000
	senior secured note, first lien, 9.00%, 9/15/22		United States		400,000		306,000
d	Nexstar Broadcasting Inc., senior note, 144A, 5.625%, 8/01/24		United States		2,000,000		1,932,500
d	Sirius XM Radio Inc.,
	senior bond, 144A, 6.00%, 7/15/24		United States		1,400,000		1,429,750
	senior bond, 144A, 5.375%, 4/15/25		United States		800,000		791,000


FSI-14		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Principal Amount*			Value
	Corporate Bonds (continued)
	Media (continued)
	Tegna Inc.,
	senior bond, 6.375%, 10/15/23		United States		1,000,000		$	1,031,250
d	senior bond, 144A, 5.50%, 9/15/24		United States		500,000			501,875
	senior note, 5.125%, 7/15/20		United States		1,000,000			1,007,500
	Time Warner Inc., senior bond, 2.95%, 7/15/26		United States		2,500,000			2,250,553
d	Unitymedia KabelBW GmbH, senior bond, 144A, 6.125%, 1/15/25		Germany		1,700,000			1,725,500
d	Univision Communications Inc., senior secured note, first lien, 144A, 5.125%, 2/15/25		United States		2,500,000			2,315,625
d	Virgin Media Finance PLC, senior bond, 144A, 6.375%, 10/15/24		United Kingdom		900,000	GBP		1,237,098
d	Virgin Media Secured Finance PLC, senior secured bond, first lien, 144A, 5.50%, 1/15/25		United Kingdom		1,900,000			1,852,500
d	Ziggo Secured Finance BV, senior secured bond, 144A, 4.25%, 1/15/27		Netherlands		700,000	EUR		810,493

								29,745,351

	Pharmaceuticals, Biotechnology & Life Sciences 1.8%
	Allergan Funding SCS, senior bond, 3.80%, 3/15/25		United States		2,200,000			2,138,794
d	Bausch Health Cos. Inc.,
	senior bond, 144A, 6.125%, 4/15/25		United States		300,000			277,500
	senior note, 144A, 5.50%, 3/01/23		United States		400,000			374,000
	senior note, first lien, 144A, 7.00%, 3/15/24		United States		200,000			209,938
	Baxalta Inc., senior note, 4.00%, 6/23/25		United States		1,100,000			1,078,165
d	Bayer US Finance II LLC, senior bond, 144A, 4.375%, 12/15/28		Germany		1,100,000			1,103,925
	Celgene Corp., senior bond, 3.45%, 11/15/27		United States		800,000			736,741
d,h	Eagle Holdings Co. II LLC, senior note, 144A, PIK, 7.625%, 5/15/22		United States		700,000			708,890
d	Endo DAC/Endo Finance LLC/Endo Finco Inc.,
	senior bond, 144A, 6.00%, 2/01/25		United States		1,200,000			942,000
	senior note, 144A, 6.00%, 7/15/23		United States		400,000			331,000
d	Jaguar Holding Co. II/Pharmaceutical Product Development LLC, senior note, 144A, 6.375%, 8/01/23		United States		1,200,000			1,197,240
d	Valeant Pharmaceuticals International,
	senior note, 144A, 6.375%, 10/15/20		United States		542,000			550,639
	senior note, 144A, 8.50%, 1/31/27		United States		1,000,000			1,017,500

								10,666,332

	Real Estate 1.2%
	American Homes 4 Rent LP, senior bond, 4.25%, 2/15/28		United States		800,000			767,324
	American Tower Corp., senior bond, 3.375%, 10/15/26		United States		2,400,000			2,224,547
	Equinix Inc.,
	senior bond, 5.375%, 4/01/23		United States		2,500,000			2,571,562
	senior bond, 5.875%, 1/15/26		United States		100,000			101,550
	MPT Operating Partnership LP/MPT Finance Corp.,
	senior bond, 5.25%, 8/01/26		United States		800,000			788,000
	senior bond, 5.00%, 10/15/27		United States		1,100,000			1,053,250

								7,506,233

	Retailing 0.9%
	Amazon.com Inc., senior note, 2.80%, 8/22/24		United States		1,000,000			954,728
	Home Depot Inc., senior note, 2.125%, 9/15/26		United States		1,500,000			1,338,866
	JD.com Inc., senior note, 3.125%, 4/29/21		China		200,000			195,211
ab,b,h	K2016470219 South Africa Ltd., senior secured note, 144A, PIK, 3.00%, 12/31/22		South Africa		1,137,987			7,007


		Semiannual Report			FSI-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Retailing (continued)
b,h	K2016470260 South Africa Ltd., senior secured note, 144A, PIK, 25.00%, 12/31/22.		South Africa		220,087	$	19,563
	Netflix Inc., senior bond, 5.875%, 2/15/25		United States		2,300,000		2,365,067
d	PetSmart Inc., senior secured note, first lien, 144A, 5.875%, 6/01/25		United States		1,000,000		772,500

							5,652,942

	Semiconductors & Semiconductor Equipment 0.3%
	Maxim Integrated Products Inc., senior note, 3.375%, 3/15/23		United States		100,000		98,871
	Qorvo Inc., senior bond, 7.00%, 12/01/25		United States		1,400,000		1,512,000
	Xilinx Inc., senior note, 2.125%, 3/15/19		United States		200,000		199,144

							1,810,015

	Software & Services 1.3%
d	First Data Corp.,
	secured note, second lien, 144A, 5.75%, 1/15/24		United States		2,100,000		2,106,510
	senior note, 144A, 7.00%, 12/01/23		United States		700,000		730,856
	Fiserv Inc., senior bond, 3.85%, 6/01/25		United States		600,000		598,293
	Infor (U.S.) Inc., senior note, 6.50%, 5/15/22		United States		2,000,000		2,017,500
d	Symantec Corp., senior note, 144A, 5.00%, 4/15/25		United States		2,200,000		2,136,198

							7,589,357

	Technology Hardware & Equipment 0.6%
d	CommScope Technologies LLC,
	senior bond, 144A, 6.00%, 6/15/25		United States		1,400,000		1,436,750
	senior bond, 144A, 5.00%, 3/15/27		United States		1,700,000		1,604,375
d	Dell International LLC/EMC Corp.,
	senior note, 144A, 5.875%, 6/15/21		United States		300,000		304,821
	senior note, 144A, 7.125%, 6/15/24		United States		200,000		212,068
	Juniper Networks Inc., senior bond, 5.95%, 3/15/41		United States		100,000		102,759
	Tech Data Corp., senior bond, 4.95%, 2/15/27		United States		200,000		196,572

							3,857,345

	Telecommunication Services 1.8%
d	Digicel Group Ltd., senior note, 144A, 8.25%, 9/30/20		Bermuda		1,200,000		892,656
d	Digicel Ltd., senior note, 144A, 6.00%, 4/15/21		Bermuda		1,000,000		908,550
	Hughes Satellite Systems Corp., senior bond, 6.625%, 8/01/26		United States		1,600,000		1,484,000
	Sprint Communications Inc.,
	senior note, 6.00%, 11/15/22		United States		500,000		496,875
d	senior note, 144A, 9.00%, 11/15/18		United States		148,000		151,145
d	senior note, 144A, 7.00%, 3/01/20		United States		800,000		832,000
	Sprint Corp., senior bond, 7.875%, 9/15/23		United States		500,000		519,687
d	Sprint Spectrum Co. LLC,		United States		1,600,000		1,570,000
	senior secured bond, first lien, 144A, 5.152%, 9/20/29
	T-Mobile USA Inc.,
	senior bond, 6.50%, 1/15/24		United States		500,000		521,530
	senior bond, 6.375%, 3/01/25		United States		1,300,000		1,352,000
	senior note, 6.00%, 4/15/24		United States		200,000		207,500
	Verizon Communications Inc., senior note, 5.15%, 9/15/23		United States		2,000,000		2,133,625

							11,069,568

	Transportation 1.1%
d	DAE Funding LLC,
	senior note, 144A, 4.50%, 8/01/22		United Arab Emirates		700,000		678,125
	senior note, 144A, 5.00%, 8/01/24		United Arab Emirates		1,600,000		1,533,080


FSI-16		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Transportation (continued)
^d	Park Aerospace Holdings Ltd.,
	senior note, 144A, 5.25%, 8/15/22		Ireland		1,000,000	$	992,200
	senior note, 144A, 5.50%, 2/15/24		Ireland		1,300,000		1,287,000
^d	Transurban Finance Co. Pty. Ltd., senior secured bond, 144A, 3.375%, 3/22/27		Australia		1,100,000		1,021,559
	United Airlines Pass Through Trust, second lien, 2016-1, A, 3.45%, 1/07/30		United States		973,619		942,441

							6,454,405

	Utilities 3.4%
	Calpine Corp.,
	senior bond, 5.75%, 1/15/25		United States		1,200,000		1,100,250
	senior note, 5.375%, 1/15/23		United States		1,300,000		1,241,500
^d	Colbun SA, senior note, 144A, 3.95%, 10/11/27		Chile		700,000		653,282
	Dominion Energy Inc., senior bond, 2.85%, 8/15/26		United States		1,100,000		997,849
^d,e	EDF SA, junior sub. note, 144A, 5.25% to 1/29/23, FRN thereafter, Perpetual		France		3,000,000		2,928,405
	Exelon Corp., senior bond, 3.95%, 6/15/25		United States		1,800,000		1,791,308
^d	InterGen NV, secured bond, 144A, 7.00%, 6/30/23		Netherlands		700,000		696,500
^d	Israel Electric Corp. Ltd., secured bond, 144A, 4.25%, 8/14/28		Israel		1,000,000		971,075
	The Southern Co., senior bond, 3.25%, 7/01/26		United States		3,600,000		3,383,901
^d	State Grid Overseas Investments 2016 Ltd., senior note, 144A, 3.50%, 5/04/27		China		1,300,000		1,240,635
^d	Talen Energy Supply LLC,
	senior note, 144A, 9.50%, 7/15/22		United States		1,700,000		1,677,696
	senior note, 144A, 10.50%, 1/15/26		United States		500,000		447,500
^d	Three Gorges Finance I Cayman Islands Ltd., senior note, 144A, 3.15%, 6/02/26		China		1,300,000		1,219,446
^d	Vistra Energy Corp., senior note, 144A, 8.00%, 1/15/25		United States		2,000,000		2,156,900

							20,506,247


	Total Corporate Bonds (Cost $298,618,029)						289,703,703

^k,l	Senior Floating Rate Interests 11.6%
	Automobiles & Components 0.4%
	Allison Transmission Inc., New Term Loans, 3.85%, (1-month USD LIBOR + 1.75%), 9/23/22		United States		828,930		833,126
	TI Group Automotive Systems LLC, Initial US Term Loan, 4.594%, (1-month USD LIBOR + 2.50%), 6/30/22		United States		1,823,170		1,826,589

							2,659,715

	Capital Goods 0.1%
	Doncasters U.S. Finance LLC, Second Lien Term Loan, 10.584%, (3-month USD LIBOR + 8.25%), 10/09/20		United States		76,700		72,738
	Harsco Corp., Term Loan B-2, 4.375%, (1-month USD LIBOR + 2.25%), 12/10/24		United States		231,424		232,002
	Leidos Innovations Corp., Term Loan B, 3.875%, (1-month USD LIBOR + 1.75%), 8/16/23		United States		158,538		159,302

							464,042


		Semiannual Report		FSI-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Principal Amount*		Value
k,l	Senior Floating Rate Interests (continued)
	Commercial & Professional Services 0.1%
	KAR Auction Services Inc., Tranche B-5 Term Loans, 4.625%, (1-month USD LIBOR + 2.50%), 3/09/23		United States		686,117	$	688,690
	Ventia Pty. Ltd., Term B Loans (USD), 5.834%, (3-month USD LIBOR + 3.50%), 5/21/22		Australia		83,231		83,959

							772,649

	Consumer Services 0.6%
	Aristocrat Technologies Inc., Term B-3 Loans, 4.105%, (2-month USD LIBOR + 1.75%), 10/19/24		United States		945,559		941,007
	Avis Budget Car Rental LLC, Tranche B Term Loans, 4.34%, (3-month USD LIBOR + 2.00%), 2/13/25		United States		1,024,168		1,026,728
	Eldorado Resorts, Inc.,
	Initial Term Loan, 4.375%, (1-month USD LIBOR + 2.25%), 4/17/24		United States		161,502		161,956
	Initial Term Loan, 4.375%, (2-month USD LIBOR + 2.25%), 4/17/24		United States		183,594		184,110
	Greektown Holdings LLC, Initial Term Loan, 5.094%, (1-month USD LIBOR + 3.00%), 4/25/24		United States		279,865		279,865
	Las Vegas Sands LLC, Term B Loans, 3.844%, (1-month USD LIBOR + 1.75%), 3/27/25		United States		847,875		843,477

							3,437,143

	Diversified Financials 0.1%
m,n	Trans Union LLC, Term A-2 Facility, TBD, 8/09/22		United States		822,628		821,600

	Energy 1.5%
	Bowie Resource Holdings LLC,
	First Lien Initial Term Loan, 7.844%, (1-month USD LIBOR + 5.75%), 8/14/20		United States		2,234,507		2,205,644
	Second Lien Initial Term Loan, 12.844%, (1-month USD LIBOR + 10.75%), 2/16/21		United States		1,248,332		1,145,345
	Fieldwood Energy LLC, Closing Date Loans, 7.344%, (1-month USD LIBOR + 5.25%), 4/11/22		United States		4,096,974		4,111,805
	Foresight Energy LLC, Term Loans, 8.109%, (3-month USD LIBOR + 5.75%), 3/28/22		United States		1,147,018		1,141,761
	OSG Bulk Ships Inc., Initial Term Loan, 6.77%, (3-month USD LIBOR + 4.25%), 8/05/19		United States		826,633		822,500

							9,427,055

	Food & Staples Retailing 0.3%
	Aramark Corp., Term B-3 Loan, 4.084%, (3-month USD LIBOR + 1.75%), 3/11/25		United States		384,646		384,887
	Smart & Final Stores LLC, First Lien Term Loan, 5.594%, (1-month USD LIBOR + 3.50%), 11/15/22		United States		1,157,580		1,132,498

							1,517,385

	Food, Beverage & Tobacco 0.8%
	B&G Foods Inc., Tranche B-3 Term Loan, 4.094%, (1-month USD LIBOR + 2.00%), 11/02/22		United States		2,211,651		2,213,955
	JBS USA LUX SA, New Initial Term Loans, 4.834% - 4.835%, (3-month USD LIBOR + 2.50%), 10/30/22		United States		2,132,608		2,123,499
m	Pinnacle Foods Finance LLC, Initial B Term Loan, 3.751%, (1-month USD LIBOR + 1.75%), 2/03/24		United States		370,384		370,894

							4,708,348


FSI-18		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Principal Amount*		Value
k,l	Senior Floating Rate Interests (continued)
	Health Care Equipment & Services 0.6%
	DaVita Healthcare Partners Inc., Tranche B Term Loan, 4.844%, (1-month USD LIBOR + 2.75%), 6/24/21		United States		1,114,197	$	1,118,471
m,n	IQVIA Inc., U.S. Term Loan B, TBD, 6/08/25		United States		702,075		704,562
	Quintiles IMS Inc., Term B-2 Dollar Loans, 4.334%, (3-month USD LIBOR + 2.00%), 1/20/25		United States		1,150,921		1,148,907
	U.S. Renal Care Inc., Initial Term Loan, 6.584%, (3-month USD LIBOR + 4.25%), 12/31/22		United States		468,694		464,359

							3,436,299

	Household & Personal Products 0.2%
	Spectrum Brands, Inc.,
	USD Term Loans, 4.094%, (1-month USD LIBOR + 2.00%), 6/23/22		United States		351,274		350,615
	USD Term Loans, 4.085% - 4.097%, (2-month USD LIBOR + 2.00%), 6/23/22		United States		362,838		362,158
	USD Term Loans, 4.363%, (3-month USD LIBOR + 2.00%), 6/23/22		United States		229,177		228,747

							941,520

	Materials 1.3%
	Ashland LLC, Term B Loan, 3.835% - 3.844%, (1-month USD LIBOR + 1.75%), 5/17/24		United States		2,445,209		2,442,152
	Axalta Coating Systems U.S. Holdings Inc., Term B-3 Dollar Loan, 4.084%, (3-month USD LIBOR + 1.75%), 6/01/24		United States		575,339		573,227
	Chemours Co., Tranche B-2 US$ Term Loan, 3.85%, (1-month USD LIBOR + 1.75%), 4/03/25		United States		1,343,406		1,331,652
	Crown Americas LLC, Term B Loans, 4.312%, (3-month USD LIBOR + 2.00%), 4/03/25		United States		1,482,156		1,485,759
	Oxbow Carbon LLC,
	Second Lien Term Loan, 9.594%, (1-month USD LIBOR + 7.50%), 1/04/24		United States		229,047		232,483
	Tranche A Term Loan, 4.594%, (1-month USD LIBOR + 2.50%), 1/04/22		United States		1,282,500		1,284,103
	Tranche B Term Loan, 5.844%, (1-month USD LIBOR + 3.75%), 1/04/23		United States		546,000		552,143

							7,901,519

	Media 1.2%
	Altice U.S. Finance I Corp., March 2017 Refinancing Term Loan Commitments, 4.344%, (1-month USD LIBOR + 2.25%), 7/28/25		United States		198,107		197,942
	AMC Entertainment Holdings Inc.,
	2016 Incremental Term Loans, 4.323%, (1-month USD LIBOR + 2.25%), 12/15/23		United States		736,061		735,026
	Initial Term Loans, 4.323%, (1-month USD LIBOR + 2.25%), 12/15/22		United States		989,116		989,028
	Charter Communications Operating LLC, Term A-2 Loan, 3.60%, (1-month USD LIBOR + 1.50%), 3/31/23		United States		915,936		916,795
	CSC Holdings LLC, March 2017 Incremental Term Loans, 4.323%, (1-month USD LIBOR + 2.25%), 7/17/25		United States		1,221,857		1,214,514
	Gray Television Inc., Term B-2 Loan, 4.251%, (1-month USD LIBOR + 2.25%), 2/07/24		United States		895,455		893,776
	Lions Gate Capital Holdings LLC, Term A Loan, 3.841%, (1-month USD LIBOR + 1.75%), 3/22/23		Canada		255,898		255,578


		Semiannual Report		FSI-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Principal Amount*		Value
k,l	Senior Floating Rate Interests (continued)
	Media (continued)
	Live Nation Entertainment Inc., Term B-3 Loans, 3.875%, (1-month USD LIBOR + 1.75%), 10/31/23		United States		577,078	$	576,357
m,n	Sinclair Television Group Inc., Tranche B-1 Term Loans, TBD, 1/31/25		United States		1,300,000		1,299,668

							7,078,684

	Pharmaceuticals, Biotechnology & Life Sciences 1.3%
	Endo Luxembourg Finance Co. I S.A.R.L. and Endo LLC, Initial Term Loans, 6.375%, (1-month USD LIBOR + 4.25%), 4/29/24		United States		2,237,719		2,227,228
	Grifols Worldwide Operations USA Inc., Tranche B Term Loan, 4.238%, (1-week USD LIBOR + 2.25%), 1/31/25		United States		2,329,537		2,332,206
	Syneos Health Inc., Initial Term B Loans, 4.094%, (1-month USD LIBOR + 2.00%), 8/01/24		United States		3,344,952		3,332,927
	Valeant Pharmaceuticals International Inc., Initial Term Loans, 5.092%, (1-month USD LIBOR + 3.00%), 6/02/25		United States		314,372		313,665

							8,206,026

	Retailing 1.1%
	Ascena Retail Group Inc., Tranche B Term Loan, 6.625%, (1-month USD LIBOR + 4.50%), 8/21/22		United States		2,952,482		2,645,424
	General Nutrition Centers Inc., Tranche B-2 Term Loans, 10.85%, (1-month USD LIBOR + 8.75%), 3/04/21		United States		1,041,233		1,006,526
	Harbor Freight Tools USA Inc., Refinancing Loans, 4.594%, (1-month USD LIBOR + 2.50%), 8/19/23		United States		1,990,000		1,983,604
	Jo-Ann Stores Inc., Initial Loans, 7.509%, (6-month USD LIBOR + 5.00%), 10/23/23		United States		1,360,152		1,352,784

							6,988,338

	Semiconductors & Semiconductor Equipment 0.2%
	MKS Instruments Inc., Tranche B-4 Term Loan, 3.844%, (1-month USD LIBOR + 1.75%), 4/29/23		United States		262,472		263,128
	ON Semiconductor Corp., 2018 New Replacement Term B-3 Loans, 3.844%, (1-month USD LIBOR + 1.75%), 3/31/23		United States		1,160,052		1,160,857

							1,423,985

	Software & Services 0.2%
m	First Data Corp., Term A Loan, 3.841%, (1-month USD LIBOR + 1.75%), 6/02/20		United States		390,796		389,657
	Rackspace Hosting Inc., Term B Loans, 5.363%, (3-month USD LIBOR + 3.00%), 11/03/23		United States		384,735		380,485
	Wex Inc., Term B-2 Loan, 4.344%, (1-month USD LIBOR + 2.25%), 7/01/23		United States		649,939		650,954

							1,421,096

	Technology Hardware & Equipment 0.3%
	Ciena Corp., Refinancing Term Loan, 4.584%, (1-month USD LIBOR + 2.50%), 1/28/22		United States		180,406		181,308
	CommScope Inc., Tranche 5 Term Loans, 4.094%, (1-month USD LIBOR + 2.00%), 12/29/22		United States		1,519,956		1,527,556

							1,708,864


FSI-20		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Principal Amount*			Value
k,l	Senior Floating Rate Interests (continued)
	Telecommunication Services 0.1%
	Consolidated Communications Inc., Initial Term Loan, 5.10%, (1-month USD LIBOR + 3.00%), 10/05/23		United States		236,372		$	233,772
	Global Tel*Link Corp., Term Loan, 6.334%, (3-month USD LIBOR + 4.00%), 5/23/20		United States		272,305			273,582

								507,354

	Transportation 0.6%
	Air Canada, Term Loan, 4.094%, (1-month USD LIBOR + 2.00%), 10/06/23		Canada		49,179			49,445
	Hertz Corp., Tranche B-1 Term Loan, 4.85%, (1-month USD LIBOR + 2.75%), 6/30/23		United States		1,693,763			1,688,646
	International Seaways Operating Corp., Initial Term Loans, 8.10%, (1-month USD LIBOR + 5.50%), 6/22/22		United States		684,008			684,008
	Navios Maritime Midstream Partners LP, Initial Term Loan, 6.83%, (3-month USD LIBOR + 4.50%), 6/18/20		Marshall Islands		1,265,982			1,258,070

								3,680,169

	Utilities 0.6%
	EFS Cogen Holdings I LLC (Linden), Term B Advance, 5.59%, (3-month USD LIBOR + 3.25%), 6/28/23		United States		2,864,650			2,866,217
	NRG Energy Inc., Term Loan B, 4.084%, (3-month USD LIBOR + 1.75%), 6/30/23		United States		852,600			848,817

								3,715,034


	Total Senior Floating Rate Interests (Cost $71,041,981)							70,816,825

	Foreign Government and Agency Securities 4.9%
d	The Export-Import Bank of India, senior note, 144A, 3.875%, 2/01/28		India		1,800,000			1,685,997
	Government of Hungary, senior note, 6.25%, 1/29/20		Hungary		1,500,000			1,572,083
	Government of Indonesia,
	senior bond, FR34, 12.80%, 6/15/21		Indonesia		17,235,000,000	IDR		1,367,735
	senior bond, FR64, 6.125%, 5/15/28		Indonesia		34,000,000,000	IDR		2,124,704
	senior bond, FR70, 8.375%, 3/15/24		Indonesia		19,648,000,000	IDR		1,403,604
	Government of Mexico,
	senior bond, M, 6.50%, 6/10/21		Mexico		362,000^o	MXN		1,765,965
	senior note, M 10, 8.50%, 12/13/18		Mexico		1,255,200^o	MXN		6,350,202
d	Government of Serbia,
	senior note, 144A, 4.875%, 2/25/20		Serbia		4,000,000			4,069,760
	senior note, 144A, 7.25%, 9/28/21		Serbia		200,000			218,622
d	Government of Ukraine,
	144A, 7.75%, 9/01/22		Ukraine		200,000			195,730
	144A, 7.75%, 9/01/23		Ukraine		369,000			355,864
	144A, 7.75%, 9/01/24		Ukraine		369,000			349,281
	144A, 7.75%, 9/01/25		Ukraine		369,000			346,057
	144A, 7.75%, 9/01/26		Ukraine		369,000			342,091
	144A, 7.75%, 9/01/27		Ukraine		369,000			339,489
	^a,p144A, VRI, GDP Linked Security, 5/31/40		Ukraine		1,952,000			1,234,845


		Semiannual Report		FSI-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

Country

Principal Amount*

Value

Foreign Government and Agency Securities (continued)

Nota Do Tesouro Nacional,

10.00%, 1/01/21

Brazil

13,900^q

BRL

3,645,154

10.00%, 1/01/23

Brazil

2,800^q

BRL

708,633

Index Linked, 6.00%, 5/15/23

Brazil

1,950^q

BRL

1,593,971

Total Foreign Government and Agency Securities
(Cost $30,001,613)

29,669,787

U.S. Government and Agency Securities 6.2%

U.S. Treasury Bond,

7.875%, 2/15/21

United States

900,000

1,019,918

6.50%, 11/15/26

United States

2,400,000

3,055,969

3.00%, 11/15/45

United States

5,000,000

5,013,867

Index Linked, 0.625%, 1/15/24

United States

3,661,111

3,657,362

U.S. Treasury Note,

3.75%, 11/15/18

United States

7,000,000

7,042,383

2.75%, 2/15/24

United States

1,000,000

998,652

2.25%, 11/15/25

United States

8,500,000

8,175,107

Index Linked, 0.125%, 7/15/24

United States

8,988,868

8,740,526

Total U.S. Government and Agency Securities
(Cost $38,400,462)

37,703,784

Asset-Backed Securities and Commercial Mortgage-Backed Securities 15.6%

Banks 0.7%

Citigroup Commercial Mortgage Trust, 2006-C5, AJ, 5.482%, 10/15/49

United States

874,583

835,675

Commercial Mortgage Trust, 2006-GG7, AJ, FRN, 5.951%, 7/10/38

United States

1,045,000

963,499

CSAIL Commercial Mortgage Trust, 2015-C1, A4, 3.505%, 4/15/50

United States

915,000

911,619

CWABS Asset-Backed Certificates Trust, 2005-11, AF4, FRN, 4.472%, 3/25/34

United States

1,275,000

1,287,010

Merrill Lynch Mortgage Investors Trust, 2005-A6, 2A3, FRN, 2.471%, (1-month USD LIBOR + 0.38%), 8/25/35

United States

125,134

125,544

4,123,347

Diversified Financials 14.9%

d,u

AMMC CLO XI Ltd., 2012-11A, BR2, 144A, FRN, 3.959%, (3-month USD LIBOR + 1.60%), 4/30/31

United States

350,000

350,011

2012-11A, DR2, 144A, FRN, 5.209%, (3-month USD LIBOR + 2.85%), 4/30/31

United States

300,000

297,864

d,u

Antares CLO Ltd., 2018-1A, B, 144A, FRN, 4.104%, (3-month USD LIBOR + 1.65%), 4/20/31

United States

1,800,000

1,799,982

d,u

Ares CLO Ltd., 2018-48A, D, 144A, FRN, 5.039%, (3-month USD LIBOR + 2.70%), 7/20/30

United States

400,000

399,996

d,u

Ares XLIII CLO Ltd., 2017-43A, A, 144A, FRN, 3.568%, (3-month USD LIBOR + 1.22%), 10/15/29

United States

432,000

432,389

d,u

Atrium VIII, 8A, BR, 144A, FRN, 4.262%, (3-month USD LIBOR + 1.90%), 10/23/24

United States

350,000

350,781

8A, CR, 144A, FRN, 4.862%, (3-month USD LIBOR + 2.50%), 10/23/24

United States

470,000

472,040


FSI-22		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Principal Amount*		Value
	Asset-Backed Securities and Commercial Mortgage- Backed Securities (continued)
	Diversified Financials (continued)
d,u	Atrium XI, 11A, CR, 144A, FRN, 4.512%, (3-month USD LIBOR + 2.15%), 10/23/25		United States		1,820,000	$	1,823,749
	Banc of America Commercial Mortgage Trust,
	2015-UBS7, A3, 3.441%, 9/15/48		United States		1,050,000		1,038,782
	2015-UBS7, A4, 3.705%, 9/15/48		United States		1,170,000		1,174,816
	^t2015-UBS7, B, FRN, 4.507%, 9/15/48		United States		760,000		779,721
d,t	BCAP LLC Trust, 2009-RR1, 2A2, 144A, FRN, 3.938%, 5/26/35		United States		383,883		372,727
d,u	Betony CLO 2 Ltd., 2018-1A, C, 144A, FRN, 5.009%, (3-month USD LIBOR + 2.90%), 4/30/31		United States		400,000		400,000
d,u	Birchwood Park CLO Ltd., 2014-1A, AR, 144A, FRN, 3.528%, (3-month USD LIBOR + 1.18%), 7/15/26		United States		250,000		250,185
d,u	BlueMountain CLO Ltd.,
	2012-2A, BR, 144A, FRN, 4.231%, (3-month USD LIBOR + 1.90%), 11/20/28		United States		510,000		511,535
	2012-2A, CR, 144A, FRN, 4.931%, (3-month USD LIBOR + 2.60%), 11/20/28		United States		270,000		271,256
d,u	BlueMountain Fuji U.S. CLO II Ltd., 2017-2A, A1A, 144A, FRN, 3.559%, (3-month USD LIBOR + 1.20%), 10/20/30		United States		1,800,000		1,815,210
d,u	BlueMountain Fuji U.S. CLO III Ltd., 2017-3A, A2, 144A, FRN, 2.877%, (3-month USD LIBOR + 1.15%), 1/15/30		United States		200,000		200,274
d,u	Burnham Park CLO Ltd.,
	2016-1A, A, 144A, FRN, 3.789%, (3-month USD LIBOR + 1.43%), 10/20/29		United States		350,000		351,964
	2016-1A, B, 144A, FRN, 4.159%, (3-month USD LIBOR + 1.80%), 10/20/29		United States		460,000		461,205
	2016-1A, C, 144A, FRN, 4.759%, (3-month USD LIBOR + 2.40%), 10/20/29		United States		460,000		460,851
u	Capital One Multi-Asset Execution Trust,
	2014-A3, A3, FRN, 2.453%, (1-month USD LIBOR + 0.38%), 1/18/22		United States		370,000		370,774
	2016-A1, A1, FRN, 2.523%, (1-month USD LIBOR + 0.45%), 2/15/22		United States		2,950,000		2,958,226
	2016-A2, A2, FRN, 2.703%, (1-month USD LIBOR + 0.63%), 2/15/24		United States		3,990,000		4,034,056
d,u	Carlyle Global Market Strategies, 2014-4RA, C, 144A, FRN, 4.887%, (3-month USD LIBOR + 2.90%), 7/15/30		United States		300,000		300,000
d,u	Carlyle Global Market Strategies CLO Ltd.,
	2012-4A, BR, 144A, FRN, 4.259%, (3-month USD LIBOR + 1.90%), 1/20/29		United States		500,000		503,110
	2012-4A, C1R, 144A, FRN, 4.959%, (3-month USD LIBOR + 2.60%), 1/20/29		United States		480,000		483,216
d,u	Carlyle U.S. CLO Ltd., 2017-2A, A1B, 144A, FRN, 3.579%, (3-month USD LIBOR + 1.22%), 7/20/31		United States		1,150,000		1,153,312
d,u	Catamaran CLO Ltd., 2014-2A, BR, 144A, FRN, 5.305%, (3-month USD LIBOR + 2.95%), 10/18/26		United States		1,550,000		1,557,455
d,u	Cent CLO LP,
	2014-22A, A2AR, 144A, FRN, 4.313%, (3-month USD LIBOR + 1.95%), 11/07/26		United States		392,000		392,584
	2014-22A, BR, 144A, FRN, 5.313%, (3-month USD LIBOR + 2.95%), 11/07/26		United States		340,000		340,904


		Semiannual Report		FSI-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Principal Amount*		Value
	Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
	Diversified Financials (continued)
d,t	CGRBS Commercial Mortgage Trust, 2013-VN05, C, 144A, FRN, 3.703%, 3/13/35		United States		870,000	$	858,102
u	Chase Issuance Trust, 2013-A6, A6, FRN, 2.493%, (1-month USD LIBOR + 0.42%), 7/15/20		United States		1,090,000		1,090,251
u	Citibank Credit Card Issuance Trust, 2013-A4, A4, FRN, 2.511%, (1-month USD LIBOR + 0.42%), 7/24/20		United States		710,000		710,011
d,u	Cole Park CLO Ltd., 2015-1A, B, 144A, FRN, 4.609%, (3-month USD LIBOR + 2.25%), 10/20/28		United States		270,000		270,451
t	COMM Mortgage Trust, 2014-CR19, B, FRN, 4.703%, 8/10/47		United States		870,000		893,365
d	Core Industrial Trust, 2015-CALW, A, 144A, 3.04%, 2/10/34		United States		1,410,000		1,400,147
u	Discover Card Execution Note Trust, 2016-A2, A2, FRN, 2.613%, (1-month USD LIBOR + 0.54%), 9/15/21		United States		2,950,000		2,958,342
d,u	Dryden 33 Senior Loan Fund,
	2014-33A, BR, 144A, FRN, 4.198%, (3-month USD LIBOR + 1.85%), 10/15/28		United States		535,000		536,268
	2014-33A, CR, 144A, FRN, 4.848%, (3-month USD LIBOR + 2.50%), 10/15/28		United States		270,000		271,061
d,u	Dryden CLO Ltd.,
	2018-55A, A1, 144A, FRN, 3.061%, (3-month USD LIBOR + 1.02%), 4/15/31		United States		500,000		499,790
	2018-55A, D, 144A, FRN, 4.891%, (3-month USD LIBOR + 2.85%), 4/15/31		United States		300,000		299,844
	2018-64A, D, 144A, FRN, 4.869%, (3-month USD LIBOR + 2.65%), 4/18/31		United States		300,000		299,943
d,g,v	Dryden Senior Loan Fund, 2016-42A, DR, 144A, FRN, (3-month USD LIBOR + 2.93%), 7/15/30		United States		1,600,000		1,600,000
d,t	Eleven Madison Trust Mortgage Trust, 2015-11MD, A, 144A, FRN, 3.673%, 9/10/35		United States		1,350,000		1,345,534
u	FHLMC Structured Agency Credit Risk Debt Notes,
	2014-DN1, M2, FRN, 4.291%, (1-month USD LIBOR + 2.20%), 2/25/24		United States		1,117,015		1,148,832
	2014-DN3, M3, FRN, 6.091%, (1-month USD LIBOR + 4.00%), 8/25/24		United States		215,682		235,586
	2014-DN4, M3, FRN, 6.641%, (1-month USD LIBOR + 4.55%), 10/25/24		United States		1,449,443		1,608,588
	2014-HQ1, M3, FRN, 6.191%, (1-month USD LIBOR + 4.10%), 8/25/24		United States		380,000		419,166
	2014-HQ2, M2, FRN, 4.291%, (1-month USD LIBOR + 2.20%), 9/25/24		United States		814,387		839,291
	2014-HQ3, M3, FRN, 6.841%, (1-month USD LIBOR + 4.75%), 10/25/24		United States		880,519		979,183
	2015-DNA3, M3, FRN, 6.791%, (1-month USD LIBOR + 4.70%), 4/25/28		United States		2,250,000		2,668,934
	2015-HQ1, M2, FRN, 4.291%, (1-month USD LIBOR + 2.20%), 3/25/25		United States		176,137		176,928
	2015-HQ1, M3, FRN, 5.891%, (1-month USD LIBOR + 3.80%), 3/25/25		United States		970,000		1,039,746
	2016-DNA2, M3, FRN, 6.741%, (1-month USD LIBOR + 4.65%), 10/25/28		United States		940,000		1,085,574


FSI-24		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Principal Amount*		Value
	Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
	Diversified Financials (continued)
d,u	Flagship CLO VIII Ltd.,
	2014-8A, ARR, 144A, FRN, 2.899%, (3-month USD LIBOR + 0.85%), 1/16/26		United States		540,000	$	539,827
	2014-8A, DR, 144A, FRN, 5.099%, (3-month USD LIBOR + 3.05%), 1/16/26		United States		350,000		349,927
u	FNMA Connecticut Avenue Securities,
	2014-C02, 1M2, FRN, 4.691%, (1-month USD LIBOR + 2.60%), 5/25/24		United States		1,750,000		1,857,686
	2014-C03, 1M2, FRN, 5.091%, (1-month USD LIBOR + 3.00%), 7/25/24		United States		3,151,185		3,378,840
	2015-C01, 1M2, FRN, 6.391%, (1-month USD LIBOR + 4.30%), 2/25/25		United States		923,729		1,019,116
	2015-C01, 2M2, FRN, 6.641%, (1-month USD LIBOR + 4.55%), 2/25/25		United States		1,383,978		1,499,314
	2015-C02, 1M2, FRN, 6.091%, (1-month USD LIBOR + 4.00%), 5/25/25		United States		966,987		1,059,610
	2015-C02, 2M2, FRN, 6.091%, (1-month USD LIBOR + 4.00%), 5/25/25		United States		1,588,365		1,716,389
	2015-C03, 1M2, FRN, 7.091%, (1-month USD LIBOR + 5.00%), 7/25/25		United States		2,662,853		3,024,747
	2015-C03, 2M2, FRN, 7.091%, (1-month USD LIBOR + 5.00%), 7/25/25		United States		2,295,127		2,546,032
	2017-C01, 1M2, FRN, 5.641%, (1-month USD LIBOR + 3.55%), 7/25/29		United States		1,890,000		2,054,915
d,u	Galaxy CLO Ltd.,
	2014-17A, AR, 144A, FRN, 3.748%, (3-month USD LIBOR + 1.40%), 7/15/26		United States		720,000		721,008
	2014-17A, BR, 144A, FRN, 4.148%, (3-month USD LIBOR + 1.80%), 7/15/26		United States		470,000		470,851
	2014-17A, C1R, 144A, FRN, 4.748%, (3-month USD LIBOR + 2.40%), 7/15/26		United States		250,000		250,530
d,g,v	Galaxy XVIII CLO Ltd., 2018-28A, C, 144A, FRN, (3-month USD LIBOR + 1.95%), 7/15/31		United States		250,000		250,000
d,u	Galaxy XXVII CLO Ltd., 2018-27A, C, 144A, FRN, 5.103%, (3-month USD LIBOR + 2.75%), 5/16/31		United States		600,000		594,537
d	G-Force LLC, 2005-RRA, C, 144A, 5.20%, 8/22/36		United States		346,209		343,549
	GS Mortgage Securities Trust,
t	2016-GS3, B, FRN, 3.395%, 10/10/49		United States		900,000		863,941
	2017-GS6, B, 3.869%, 5/10/50		United States		870,000		859,238
d,t	J.P. Morgan Chase Commercial Mortgage Securities, 2016-Nine, B, 144A, FRN, 2.949%, 10/06/38		United States		1,200,000		1,110,019
	JPMCC Commercial Mortgage Securities Trust, 2017-JP6, B, 3.946%, 7/15/50		United States		1,040,000		1,028,702
d,u	LCM 26 Ltd., 26A, B, 144A, FRN, 3.326%, (3-month USD LIBOR + 1.40%), 1/20/31		United States		250,000		247,813
d,u	LCM XVI LP, 2016A, BR, 144A, FRN, 3.848%, (3-month USD LIBOR + 1.50%), 7/15/26		United States		570,000		570,684


		Semiannual Report		FSI-25

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

Country

Principal Amount*

Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)

Diversified Financials (continued)

d,u

LCM XVII LP,

2017A, BR, 144A, FRN, 4.198%, (3-month USD LIBOR + 1.85%), 10/15/26

United States

350,000

350,469

2017A, CR, 144A, FRN, 4.848%, (3-month USD LIBOR + 2.50%), 10/15/26

United States

320,000

320,464

d,u

LCM XVIII LP, 2018A, DR, 144A, FRN, 5.039%, (3-month USD LIBOR + 2.80%), 4/20/31

United States

770,000

770,316

d,u

LCM XXIV Ltd., 24A, A, 144A, FRN, 3.669%, (3-month USD LIBOR + 1.31%), 3/20/30

United States

480,000

487,109

d,u

Madison Park Funding XXIII Ltd.,

2017-23A, B, 144A, FRN, 4.066%, (3-month USD LIBOR + 1.70%), 7/27/30

United States

400,000

402,024

2017-23A, C, 144A, FRN, 4.716%, (3-month USD LIBOR + 2.35%), 7/27/30

United States

500,000

503,925

d,u

Magnetite XVIII Ltd., 2016-18A, B, 144A, FRN, 4.093%, (3-month USD LIBOR + 1.75%), 11/15/28

United States

200,000

200,544

MortgageIT Trust, 2004-1, A2, FRN, 2.991%, (1-month USD LIBOR + 0.90%), 11/25/34

United States

180,544

178,106

d,u

NZCG Funding Ltd., 2015-1A, A2R, 144A, FRN, 3.869%, (3-month USD LIBOR + 1.55%), 2/26/31

United States

2,700,000

2,701,458

d,u

Octagon Investment Partners 30 Ltd., 144A, FRN, 3.679%, (3-month USD LIBOR + 1.32%), 3/17/30

United States

480,000

482,285

d,g,v

Octagon Investment Partners 37 Ltd., 2018-2A, C, 144A, FRN, (3-month USD LIBOR + 2.85%), 7/25/30

United States

400,000

d,g,v

Octagon Investment Partners XVI Ltd., 2013-1A, DR, 144A, FRN, (3-month USD LIBOR + 3.00%), 7/17/30

United States

400,000

d,u

Octagon Investment Partners XX Ltd., 2014-1A, AR, 144A, FRN, 3.485%, (3-month USD LIBOR + 1.13%), 8/12/26

United States

900,000

901,404

d,u

Octagon Investment Partners XXIII Ltd.,

2015-1A, BR, 144A, FRN, 3.461%, (3-month USD LIBOR + 1.20%), 7/15/27

United States

400,000

397,436

2015-1A, DR, 144A, FRN, 4.811%, (3-month USD LIBOR + 2.55%), 7/15/27

United States

800,000

800,744

Opteum Mortgage Acceptance Corp. Trust, 2005-4, 1APT, FRN, 2.401%, (1-month USD LIBOR + 0.31%), 11/25/35

United States

248,813

247,394

Structured Asset Securities Corp., 2005-2XS, 2A2, FRN, 3.482%, (1-month USD LIBOR + 1.50%), 2/25/35

United States

175,187

173,018

Thornburg Mortgage Securities Trust, 2005-1, A3, FRN, 3.379%, 4/25/45

United States

167,344

168,757

d,u

Voya CLO, 2017-2A, B, 144A, FRN, 4.698%, (3-month USD LIBOR + 2.35%), 6/07/30

United States

1,800,000

1,812,147

d,u

Voya CLO Ltd.,

2013-2A, BR, 144A, FRN, 4.194%, (3-month USD LIBOR + 1.85%), 4/25/31

United States

780,000

776,170

2014-1A, CR2, 144A, FRN, 5.155%, (3-month USD LIBOR + 2.80%), 4/18/31

United States

1,000,000

1,002,010

2015-2A, B, 144A, FRN, 4.342%, (3-month USD LIBOR + 1.98%), 7/23/27

United States

820,000

821,788

2018-2A, D, 144A, FRN, 5.124%, (3-month USD LIBOR + 2.75%), 7/15/31

United States

300,000

299,946


FSI-26		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Principal Amount*		Value
	Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
	Diversified Financials (continued)
	Wells Fargo Mortgage Backed Securities Trust,
t	2004-W, A9, FRN, 3.72%, 11/25/34		United States		438,847	$	451,321
	2007-3, 3A1, 5.50%, 4/25/22		United States		80,186		81,745

							90,831,767


	Total Asset-Backed Securities and Commercial Mortgage-Backed Securities (Cost $94,955,192)						94,955,114

	Mortgage-Backed Securities 9.2%
w	Federal Home Loan Mortgage Corp. (FHLMC) Adjustable Rate 0.0%^†
	FHLMC, 3.679%, (US 1 Year CMT T-Note +/- MBS Margin), 1/01/33		United States		9,105		9,382

	Federal Home Loan Mortgage Corp. (FHLMC) Fixed Rate 5.1%
	FHLMC Gold 15 Year, 5.50%, 1/01/19 - 7/01/19		United States		7,624		7,680
	FHLMC Gold 30 Year, 3.50%, 12/01/47		United States		2,564,544		2,552,352
x	FHLMC Gold 30 Year, 3.50%, 8/01/48		United States		10,530,000		10,460,191
	FHLMC Gold 30 Year, 4.00%, 5/01/48		United States		6,834,538		6,973,180
x	FHLMC Gold 30 Year, 4.00%, 8/01/48		United States		10,320,000		10,501,014
	FHLMC Gold 30 Year, 5.00%, 4/01/34 - 8/01/35		United States		209,382		222,905
	FHLMC Gold 30 Year, 5.50%, 3/01/33 - 1/01/35		United States		170,052		183,178
	FHLMC Gold 30 Year, 6.00%, 4/01/33 - 2/01/36		United States		135,700		149,041
	FHLMC Gold 30 Year, 6.50%, 11/01/27 - 6/01/36		United States		30,217		33,670
	FHLMC Gold 30 Year, 7.00%, 9/01/21 - 4/01/30		United States		11,066		11,611
	FHLMC Gold 30 Year, 7.50%, 8/01/30 - 7/01/31		United States		979		1,031

							31,095,853

w	Federal National Mortgage Association (FNMA) Adjustable Rate 0.0%^†
	FNMA, 3.418% - 4.08%, (US 1 Year CMT T-Note +/- MBS Margin), 4/01/20 - 12/01/34		United States		99,969		105,678

	Federal National Mortgage Association (FNMA) Fixed Rate 3.5%
	FNMA 15 Year, 2.50%, 7/01/22 - 6/01/27		United States		298,689		292,871
	FNMA 15 Year, 3.00%, 4/01/33		United States		3,847,590		3,828,219
	FNMA 15 Year, 4.50%, 6/01/19 - 3/01/20		United States		9,409		9,480
	FNMA 15 Year, 5.50%, 9/01/18 - 11/01/18		United States		6,345		6,340
	FNMA 30 Year, 3.50%, 11/01/47		United States		4,488,415		4,471,055
x	FNMA 30 Year, 3.50%, 8/01/48		United States		4,580,000		4,551,700
x	FNMA 30 Year, 4.00%, 8/01/48		United States		5,120,000		5,212,400
x	FNMA 30 Year, 4.50%, 8/01/48		United States		2,700,000		2,806,576
	FNMA 30 Year, 5.00%, 4/01/30		United States		55,736		59,117
	FNMA 30 Year, 6.50%, 6/01/28 - 10/01/37		United States		150,204		166,157

							21,403,915

	Government National Mortgage Association (GNMA) Fixed Rate 0.6%
	GNMA I SF 30 Year, 5.00%, 11/15/33 - 7/15/34		United States		226,525		241,219
	GNMA I SF 30 Year, 7.00%, 10/15/28 - 6/15/32		United States		15,721		15,911
	GNMA I SF 30 Year, 7.50%, 9/15/30		United States		1,230		1,397
	GNMA II SF 30 Year, 3.50%, 9/20/47		United States		782,017		785,721
x	GNMA II SF 30 Year, 3.50%, 8/01/48		United States		1,910,000		1,914,626
	GNMA II SF 30 Year, 5.00%, 9/20/33 - 11/20/33		United States		60,694		65,274
	GNMA II SF 30 Year, 6.00%, 11/20/34		United States		79,455		87,863
	GNMA II SF 30 Year, 6.50%, 4/20/31 - 2/20/34		United States		38,886		43,602


		Semiannual Report		FSI-27

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Principal Amount*		Value
	Mortgage-Backed Securities (continued)
	Government National Mortgage Association (GNMA) Fixed Rate (continued)
	GNMA II SF 30 Year, 7.50%, 1/20/28 - 4/20/32		United States		9,891	$	11,018

							3,166,631


	Total Mortgage-Backed Securities (Cost $56,035,642)						55,781,459

	Municipal Bonds 1.1%
	California State GO, Various Purpose, Refunding, 5.00%, 9/01/29		United States		1,650,000		1,955,448
	New York City HDC Capital Fund Grant Program Revenue, New York City Housing Authority Program, Series B1, 5.00%, 7/01/33		United States		500,000		542,440
	Orlando Health Obligated Group, 3.777%, 10/01/28		United States		405,000		401,365
	Port Authority of New York and New Jersey Revenue, Consolidated, One Hundred Ninety-First Series, 4.823%, 6/01/45		United States		1,490,000		1,580,189
j	Puerto Rico Electric Power Authority Power Revenue,
	Series A, 6.75%, 7/01/36		United States		3,465,000		1,559,250
	Series XX, 5.25%, 7/01/40		United States		165,000		74,250
	San Jose RDA Successor Agency Tax Allocation, Senior, Refunding, Series A-T, 3.25%, 8/01/29		United States		540,000		524,162


	Total Municipal Bonds (Cost $8,219,834)						6,637,104


				Shares
	Escrows and Litigation Trusts 0.0%^†
a,ab	Midstates Petroleum Co. Inc./Midstates Petroleum Co. LLC, Escrow Account		United States		1,500,000		—
a,ab	NewPage Corp., Litigation Trust		United States		2,500,000		—
a	Penn Virginia Corp., Escrow Account		United States		1,500,000		3,750
a	Vistra Energy Corp., Escrow Account		United States		3,000,000		24,375


	Total Escrows and Litigation Trusts (Cost $91,006)						28,125


	Total Investments before Short Term Investments (Cost $646,744,972)						627,497,040


				Principal Amount*
	Short Term Investments 1.5%
	U.S. Government and Agency Securities (Cost $496,564) 0.1%
y	U.S. Treasury Bill, 11/01/18		United States		500,000		496,664


	Total Investments before Money Market Funds (Cost $647,241,536)						627,993,704


FSI-28		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)


		Country		Shares		Value
	Short Term Investments (continued)
	Money Market Funds (Cost $8,777,736) 1.4%
c,z	Institutional Fiduciary Trust Money Market Portfolio, 1.51%		United States		8,777,736	$	8,777,736

	Total Investments (Cost $656,019,272) 104.6%						636,771,440
	Other Assets, less Liabilities (4.6)%						(28,090,122	)

	Net Assets 100.0%					$	608,681,318

^†Rounds to less than 0.1% of net assets.

^*The principal amount is stated in U.S. dollars unless otherwise indicated.

^aNon-income producing.

^aaThe security is owned by FT Holdings Corporation III, a wholly-owned subsidiary of the Fund. See Note 1(g).

^abFair valued using significant unobservable inputs. See Note 11 regarding fair value measurements.

^bSee Note 8 regarding restricted securities.

^cSee Note 3(e) regarding investments in affiliated management investment companies.

^dSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2018, the aggregate value of these securities was $209,048,537, representing 34.3% of net assets.

^ePerpetual security with no stated maturity date.

^fSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2018, the aggregate value of these securities was $578,868, representing 0.1% of net assets.

^gSecurity purchased on a when-issued basis. See Note 1(c).

^hIncome may be received in additional securities and/or cash.

ⁱSee Note 1(f) regarding loan participation notes.

^jSee Note 7 regarding defaulted securities.

^kThe coupon rate shown represents the rate at period end.

^lSee Note 1(i) regarding senior floating rate interests.

^mSecurity purchased on a delayed delivery basis. See Note 1(c).

^oPrincipal amount is stated in 100 Mexican Peso Units.

^pThe principal represents the notional amount. See Note 1(d) regarding value recovery instruments.

^qPrincipal amount is stated in 1,000 Brazilian Real Units.

^rRedemption price at maturity and coupon payment are adjusted for inflation. See Note 1(k).

^sPrincipal amount of security is adjusted for inflation. See Note 1(k).

^tAdjustable rate security with an interest rate that is not based on a published reference index and spread. The rate is based on the structure of the agreement and current market conditions. The coupon rate shown represents the rate at period end.

^uThe coupon rate shown represents the rate inclusive of any caps or floors, if applicable, in effect at period end.

^vThe coupon rate will be determined at time of issue.

^wAdjustable Rate Mortgage-Backed Security (ARM); the rate shown is the effective rate at period end. ARM rates are not based on a published reference rate and spread, but instead pass-through weighted average interest income inclusive of any caps or floors, if applicable, from the underlying mortgage loans in which the majority of mortgages pay interest based on the index shown at their designated reset dates plus a spread, less the applicable servicing and guaranty fee (MBS margin).

^xSecurity purchased on a to-be-announced (TBA) basis. See Note 1(c).

^yThe security was issued on a discount basis with no stated coupon rate.

^zThe rate shown is the annualized seven-day effective yield at period end.


		Semiannual Report		FSI-29

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

At June 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(d).


Futures Contracts
Description	Type		Number of Contracts		Notional Amount*		Expiration Date		Value/ Unrealized Appreciation (Depreciation)
Interest Rate Contracts
Euro-Bund		Short		50	$	9,495,765		9/06/18	$	(146,065	)
Long Gilt		Long		46		7,475,599		9/26/18		(40,774	)
Ultra 10 Yr. U.S. Treasury Note		Long		100		12,823,438		9/19/18		140,753

Total Futures Contracts									$	(46,086	)

^*As of period end.

At June 30, 2018, the Fund had the following forward exchange contracts outstanding. See Note 1(d).


Forward Exchange Contracts
Currency	Counterparty^a		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts
Mexican Peso		JPHQ		Buy		17,800,000	$	859,530		7/19/18	$	34,077	$	—
Mexican Peso		JPHQ		Buy		18,200,000		990,713		7/19/18		—		(77,026	)
Mexican Peso		JPHQ		Sell		36,000,000		1,904,963		7/19/18		97,670		—
Polish Zloty		DBAB		Buy		6,600,000		1,944,436		7/19/18		—		(180,827	)
Polish Zloty		DBAB		Sell		6,600,000		1,771,850		7/19/18		8,241		—
Brazilian Real		JPHQ		Sell		10,200,000		2,743,773		8/15/18		123,326		—
British Pound		JPHQ		Buy		500,000		680,200		8/15/18		—		(18,461	)
British Pound		JPHQ		Sell		1,250,000		1,649,375		8/15/18		—		(4,971	)
Euro		JPHQ		Buy		1,400,000		1,637,535		8/15/18		4,045		—
Euro		JPHQ		Sell		1,400,000		1,735,300		8/15/18		93,720		—
Swedish Krona		JPHQ		Buy		23,600,000		2,846,172		8/15/18		—		(200,271	)
Polish Zloty		JPHQ		Buy		6,000,000		1,784,917		8/16/18		—		(180,898	)
British Pound		JPHQ		Sell		150,000		213,740		9/19/18		14,912		—
Euro		BZWS		Buy		2,561,255		3,002,303		9/19/18		9,100		—
Euro		BZWS		Sell		2,561,255		3,200,523		9/19/18		189,120		—
Euro		CITI		Buy		850,000		996,083		9/19/18		3,307		—
Euro		CITI		Sell		2,131,200		2,664,192		9/19/18		158,427		—
Euro		JPHQ		Buy		1,300,000		1,574,918		9/19/18		—		(46,439	)
Euro		JPHQ		Sell		3,740,000		4,673,205		9/19/18		275,889		—
Norwegian Krone		JPHQ		Buy		13,700,000		1,763,941		9/19/18		—		(76,321	)
Norwegian Krone		JPHQ		Sell		13,700,000		1,694,107		9/19/18		6,487		—
Swedish Krona		JPHQ		Buy		13,900,000		1,691,615		9/19/18		—		(128,931	)
Australian Dollar		DBAB		Buy		4,000,000		2,976,980		10/09/18		—		(15,233	)
Australian Dollar		DBAB		Sell		5,308,345		4,123,257		10/09/18		192,764		—
Australian Dollar		JPHQ		Sell		4,700,000		3,626,280		10/09/18		146,227		—
Brazilian Real		JPHQ		Sell		6,300,000		1,575,788		10/09/18		—		(32,976	)
Canadian Dollar		JPHQ		Buy		2,300,000		1,730,520		10/09/18		22,684		—
Canadian Dollar		JPHQ		Sell		10,000,000		7,942,125		10/09/18		319,496		—
Indian Rupee		DBAB		Buy		350,093,000		5,304,439		10/09/18		—		(262,584	)
Indian Rupee		HSBK		Buy		144,338,000		2,181,453		10/09/18		—		(102,773	)


FSI-30		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

Forward Exchange Contracts (continued)


Currency	Counterparty^a		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts (continued)
Indian Rupee		HSBK		Sell		130,000,000	$	1,890,222		10/09/18	$	18,030	$	—
Indian Rupee		JPHQ		Buy		44,000,000		665,155		10/09/18		—		(31,490	)
Mexican Peso		JPHQ		Buy		12,400,000		590,828		10/09/18		23,644		—
South Korean Won		JPHQ		Buy		1,800,000,000		1,690,093		10/10/18		—		(70,109	)
South Korean Won		JPHQ		Sell		1,800,000,000		1,700,600		10/10/18		80,615		—
Argentine Peso		JPHQ		Buy		13,500,000		605,245		10/31/18		—		(169,247	)

Total Forward Exchange Contracts											$	1,821,781	$	(1,598,557)

Net unrealized appreciation (depreciation)											$	223,224

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

At June 30, 2018, the Fund had the following credit default swap contracts outstanding. See Note 1(d).

Credit Default Swap Contracts


Description	Periodic Payment Rate Received (Paid)			Payment Frequency		Counter- party		Maturity Date		Notional Amount^a		Value			Unamortized Upfront Payments (Receipts)			Unrealized Appreciation (Depreciation)			Rating^b
Centrally Cleared Swap Contracts

Contracts to Sell Protection^c,d

Traded Index
CDX.EM.29		1.00	%		Quarterly				6/20/23	$	4,100,000	$	(162,110	)	$	(89,734	)	$	(72,376	)		Non-
																						Investment
																						Grade
CDX.NA.HY.30		5.00	%		Quarterly				6/20/23	$	4,400,000		260,243			255,577			4,666			Non-
																						Investment
																						Grade
CDX.NA.HY.30		5.00	%		Quarterly				6/20/23		1,500,000		88,719			91,464			(2,745	)		Non-

																						Investment
																						Grade
Total Centrally Cleared Swap Contracts												$	186,852		$	257,307		$	(70,455	)

OTC Swap Contracts
Contracts to Buy Protection^c
Single Name
Ally Financial Inc.		(5.00	)%		Quarterly		CITI		12/20/22	$	750,000	$	(115,194	)	$	(122,482	)	$	7,288
Ally Financial Inc.		(5.00	)%		Quarterly		JPHQ		12/20/22		1,250,000		(191,990	)		(205,545	)		13,555
Contracts to Sell Protection^c,d
Single Name
Government of Argentina		5.00	%		Quarterly		MSCO		6/20/23		5,000,000		84,969			496,617			(411,648	)		B+
Government of Brazil		1.00	%		Quarterly		CITI		6/20/23		3,250,000		(239,343	)		(187,754	)		(51,589	)		BB-
Government of Colombia		1.00	%		Quarterly		CITI		6/20/23		3,700,000		(38,879	)		(9,625	)		(29,254	)		BBB-
Government of Indonesia		1.00	%		Quarterly		JPHQ		6/20/23		2,000,000		(32,417	)		(24,414	)		(8,003	)		BBB-
Government of Mexico		1.00	%		Quarterly		BZWS		6/20/23		900,000		(13,526	)		(16,758	)		3,232			BBB+
Government of Mexico		1.00	%		Quarterly		CITI		6/20/23		900,000		(13,526	)		(11,103	)		(2,423	)		BBB+
Government of Mexico		1.00	%		Quarterly		JPHQ		6/20/23		1,700,000		(25,549	)		(12,340	)		(13,209	)		BBB+


		Semiannual Report			FSI-31

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

Credit Default Swap Contracts (continued)


Description	Periodic Payment Rate Received (Paid)			Payment Frequency		Counter- party		Maturity Date		Notional Amount^a		Value			Unamortized Upfront Payments (Receipts)			Unrealized Appreciation (Depreciation)			Rating^b
OTC Swap Contracts (continued)
Contracts to Sell Protection^c,d(continued)
Traded Index
^eCitibank Bespoke Cambridge
Index, Equity Tranche 0-3%		0.00	%		Quarterly		CITI		12/20/19	$	2,900,000	$	(594,823	)	$	(349,890	)	$	(244,933	)		Non-
																						Investment
																						Grade
^eCitibank Bespoke Index,
Tranche 3-7%		1.30	%		Quarterly		CITI		6/20/19		1,600,000		(10,317	)		—			(10,317	)		Non-
																						Investment
																						Grade
^eCitibank Bespoke Index,
Tranche 3-7%		1.40	%		Quarterly		CITI		6/20/19		1,300,000		(7,092	)		—			(7,092	)		Non-
																						Investment
																						Grade
^eCitibank Bespoke Lisbon
Index, Equity Tranche 0-3%		0.00	%		Quarterly		CITI		6/20/19		530,000		(45,285	)		(60,985	)		15,700			Non-
																						Investment
																						Grade
^eCitibank Bespoke Verona
Index, Equity Tranche 0-3%		0.00	%		Quarterly		CITI		12/20/19		1,100,000		(195,468	)		(162,911	)		(32,557	)		Non-
																						Investment
																						Grade
^eCitibank Bespoke Verona
Index, Mezzanine Tranche 7-15%		0.40	%		Quarterly		CITI		12/20/19		3,100,000		(634	)		—			(634	)		Non-
																						Investment
																						Grade
MCDX.NA.30		1.00	%		Quarterly		CITI		6/20/23		2,270,000		48,576			52,839			(4,263	)		Investment

																						Grade
Total OTC Swap Contracts												$	(1,390,498	)	$	(614,351	)	$	(776,147	)

Total Credit Default Swap Contracts												$	(1,203,646	)	$	(357,044	)	$	(846,602	)

^aFor contracts to sell protection, the notional amount is equal to the maximum potential amount of the future payments and no recourse provisions have been entered into in association with the contracts.

^bBased on Standard and Poor’s (S&P) Rating for single name swaps and internal ratings for index swaps. Internal ratings based on mapping into equivalent ratings from external vendors.

^cPerformance triggers for settlement of contract include default, bankruptcy or restructuring for single name swaps and failure to pay or bankruptcy of the underlying securities for traded index swaps.

^dThe fund enters contracts to sell protection to create a long credit position.

^eRepresents a custom index comprised of a basket of underlying issuers.


FSI-32		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

At June 30, 2018, the Fund had the following cross-currency swap contracts outstanding. See Note 1(d).

Cross-Currency Swap Contracts

Description

Payment
Frequency

Counter-
party

Maturity
Date

Notional
Amount

Value/
Unrealized
Appreciation
(Depreciation)

OTC Swap Contracts

Receive Floating 3-month USD LIBOR + 2.87%

Quarterly

464,800

USD

Pay Fixed 2.50%

Annual

CITI

5/04/21

400,000

EUR

(2,260

)

At June 30, 2018, the Fund had the following total return swap contracts outstanding. See Note 1(d).

Total Return Swap Contracts

Underlying Instruments

Financing Rate

Payment
Frequency

Counterparty

Maturity
Date

Notional
Value

Value/
Unrealized
Appreciation
(Depreciation)

OTC Swap Contracts

Long^a

IBOXX USD Liquid Leveraged Loans

3-month USD LIBOR

Quarterly

GSCO

6/20/19

5,500,000

(16,350

)

^aThe Fund receives the total return on the underlying instrument and pays a variable financing rate.

See Note 9 regarding other derivative information.

See Abbreviations on page FSI-52.


		The accompanying notes are an integral part of these consolidated financial statements. \| Semiannual Report		FSI-33

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Consolidated Financial Statements

Consolidated Statement of Assets and Liabilities

June 30, 2018 (unaudited)


	Franklin Strategic Income VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	606,656,315
Cost - Non-controlled affiliates (Note 3e)		49,362,957

Value - Unaffiliated issuers	$	588,434,859
Value - Non-controlled affiliates (Note 3e)		48,336,581
Cash		6,529,244
Restricted cash for OTC derivative contracts (Note 1e)		300,000
Foreign currency, at value (cost $604,297)		610,413
Receivables:
Investment securities sold		39,279,139
Capital shares sold		45,517
Dividends and interest		5,548,816
Deposits with brokers for:
OTC derivative contracts		1,310,000
Futures contracts		397,358
Centrally cleared swap contracts		849,519
OTC swap contracts (upfront payments $581,522)		549,456
Unrealized appreciation on OTC forward exchange contracts		1,821,781
Unrealized appreciation on OTC swap contracts		39,775
FT Subsidiary deferred tax benefit (Note 1g)		473,781
Other assets		300

Total assets		694,526,539

Liabilities:
Payables:
Investment securities purchased		80,805,389
Capital shares redeemed		484,582
Management fees		284,274
Distribution fees		127,060
Variation margin on futures contracts		21,073
Variation margin on centrally cleared swap contracts		5,492
Deposits from brokers for:
OTC derivative contracts		300,000
OTC swap contracts (upfront receipts $1,519,209)		1,163,807
Unrealized depreciation on OTC forward exchange contracts		1,598,557
Unrealized depreciation on OTC swap contracts		834,532
Deferred tax		20,651
Accrued expenses and other liabilities		199,804

Total liabilities		85,845,221

Net assets, at value	$	608,681,318

Net assets consist of:
Paid-in capital	$	651,307,141
Undistributed net investment income		8,924,235
Net unrealized appreciation (depreciation)		(19,521,367	)
Accumulated net realized gain (loss)		(32,028,691	)

Net assets, at value	$	608,681,318


FSI-34		Semiannual Report \| The accompanying notes are an integral part of these consolidated financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statement of Assets and Liabilities (continued)

June 30, 2018 (unaudited)


	Franklin Strategic Income VIP Fund

Class 1:
Net assets, at value	$	333,800,530

Shares outstanding		31,158,509

Net asset value and maximum offering price per share	$	10.71


Class 2:
Net assets, at value	$	208,250,300

Shares outstanding		20,125,973

Net asset value and maximum offering price per share	$	10.35


Class 4:
Net assets, at value	$	66,630,488

Shares outstanding		6,264,838

Net asset value and maximum offering price per share	$	10.64


The accompanying notes are an integral part of these consolidated financial statements. \| Semiannual Report \|					FSI-35

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statement of Operations

for the six months ended June 30, 2018 (unaudited)


		Franklin Strategic Income VIP Fund
	Investment income:
	Dividends:
	Non-controlled affiliates (Note 3e)	$	1,780,439
	Interest: (net of foreign taxes)~
	Unaffiliated issuers		13,186,954

	Total investment income		14,967,393

	Expenses:
	Management fees (Note 3a)		1,888,689
	Distribution fees: (Note 3c)
	Class 2		262,061
	Class 4		122,654
	Custodian fees (Note 4)		13,874
	Reports to shareholders		74,940
	Professional fees		67,534
	Trustees’ fees and expenses		1,667
	Other		32,761

	Total expenses		2,464,180
	Expense reductions (Note 4)		(14,303	)
	Expenses waived/paid by affiliates (Note 3e)		(140,208	)

	Net expenses		2,309,669

	Net investment income		12,657,724

	Realized and unrealized gains (losses):
	Net realized gain (loss) from:
	Investments:^#
	Unaffiliated issuers		(3,663,105	)
	Foreign currency transactions		(109,737	)
	Forward exchange contracts		(1,008,966	)
	Futures contracts		(153,794	)
	Swap contracts		383,598

	Net realized gain (loss)		(4,552,004	)

	Net change in unrealized appreciation (depreciation) on:
	Investments:
	Unaffiliated issuers		(14,244,361	)
	Non-controlled affiliates (Note 3e)		(760,045	)
	Translation of other assets and liabilities denominated in foreign currencies		(15,760	)
	Forward exchange contracts		341,237
	Futures contracts		(73,783	)
	Swap contracts		(922,608	)
	Change in FT Subsidiary deferred tax benefit (Note 1g)		473,781
	Change in deferred taxes on unrealized appreciation		70,028

	Net change in unrealized appreciation (depreciation)		(15,131,511	)

	Net realized and unrealized gain (loss)		(19,683,515	)

	Net increase (decrease) in net assets resulting from operations	$	(7,025,791	)

^~	Foreign taxes withheld on interest	$	32,069
^#	Net of foreign taxes	$	19,017


FSI-36		Semiannual Report \| The accompanying notes are an integral part of these consolidated financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Changes in Net Assets


	Franklin Strategic Income VIP Fund
	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	12,657,724		$	26,009,801
Net realized gain (loss)		(4,552,004	)		(9,146,959	)
Net change in unrealized appreciation (depreciation)		(15,131,511	)		11,365,697

Net increase (decrease) in net assets resulting from operations		(7,025,791	)		28,228,539

Distributions to shareholders from:
Net investment income:
Class 1		(9,703,924	)		(11,689,930	)
Class 2		(5,724,625	)		(6,228,631	)
Class 4		(1,690,861	)		(2,076,378	)

Total distributions to shareholders		(17,119,410	)		(19,994,939	)

Capital share transactions: (Note 2)
Class 1		(14,273,855	)		(39,684,506	)
Class 2		2,164,813			8,628,689
Class 4		(4,813,441	)		(7,192,045	)

Total capital share transactions		(16,922,483	)		(38,247,862	)

Net increase (decrease) in net assets		(41,067,684	)		(30,014,262	)
Net assets:
Beginning of period		649,749,002			679,763,264

End of period	$	608,681,318		$	649,749,002

Undistributed net investment income included in net assets:
End of period	$	8,924,235		$	13,385,921


The accompanying notes are an integral part of these consolidated financial statements. \| Semiannual Report \|					FSI-37

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Consolidated Financial Statements (unaudited)

Franklin Strategic Income VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eighteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Strategic Income VIP Fund (Fund) is included in this report. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. At June 30, 2018, 66.4% of the Fund’s shares were held through one insurance company. Investment activities of these insurance company separate accounts could have a material impact on the Fund. The Fund offers three classes of shares: Class 1, Class 2 and Class 4. Each class of shares may differ by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Investments in open-end mutual funds are valued at the closing NAV.

Certain derivative financial instruments are centrally cleared or trade in the OTC market. The Fund’s pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to determine the fair value of those instruments. The Fund’s net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.


FSI-38		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

b. Foreign Currency Translation

c. Securities Purchased on a When-Issued or Delayed Delivery and TBA Basis

The Fund purchases securities on a when-issued or delayed delivery and to-be-announced (TBA) basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of holding the securities, it may sell the securities before the settlement date. Sufficient assets have been segregated for these securities.


		Semiannual Report			FSI-39

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

d. Derivative Financial Instruments

The Fund invested in derivative financial instruments in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown in the Consolidated Statement of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Consolidated Statement of Operations.

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Consolidated Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement.

can be in the form of cash and/or securities. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the Fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of Fund business each day and any additional collateral required due to changes in derivative values may be delivered by the Fund or the counterparty the next business day, or within a few business days. Collateral pledged and/or received by the Fund for OTC derivatives, if any, is held in segregated accounts with the Fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives. To the extent that the amounts due to the Fund from its counterparties are not subject to collateralization or are not fully collateralized, the Fund bears the risk of loss from counterparty non-performance.

The Fund entered into exchange traded futures contracts primarily to manage and/or gain exposure to interest rate risk. A futures contract is an agreement between the Fund and a counterparty to buy or sell an asset at a specified price on a future date. Required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable.

The Fund entered into OTC forward exchange contracts primarily to manage and/or gain exposure to certain foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.

The Fund entered into credit default swap contracts primarily to manage exposure to credit risk. A credit default swap is an agreement between the Fund and a counterparty whereby the buyer of the contract receives credit protection and the seller of the contract guarantees the credit worthiness of a referenced debt obligation. These agreements may be privately negotiated in the over-the-counter market (OTC credit default swaps) or may be executed in a multilateral trade facility platform, such as a registered exchange (centrally cleared credit default swaps). The underlying referenced debt obligation may be a single issuer of corporate or sovereign debt, a credit index, a basket of issuers or indices, or a tranche of a credit index or basket of issuers or indices. In the event of a default of the underlying referenced debt obligation, the buyer is entitled to receive the


FSI-40		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

notional amount of the credit default swap contract from the seller in exchange for the referenced debt obligation, a net settlement amount equal to the notional amount of the credit default swap less the recovery value of the referenced debt obligation, or other agreed upon amount. For centrally cleared credit default swaps, required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable in the Consolidated Statement of Assets and Liabilities. Over the term of the contract, the buyer pays the seller a periodic stream of payments, provided that no event of default has occurred. Such periodic payments are accrued daily as an unrealized appreciation or depreciation until the payments are made, at which time they are realized. Upfront payments and receipts are reflected in the Consolidated Statement of Assets and Liabilities and represent compensating factors between stated terms of the credit default swap agreement and prevailing market conditions (credit spreads and other relevant factors). These upfront payments and receipts are amortized over the term of the contract as a realized gain or loss in the Consolidated Statement of Operations.

The Fund entered into OTC cross currency swap contracts primarily to manage and/or gain exposure to interest rate risk and certain foreign currencies. A cross currency swap is an agreement between the Fund and a counterparty to exchange cash flows (determined using either a fixed or floating rate) based on the notional amounts of two different currencies. The notional amounts are typically determined based on the spot exchange rates at the opening of the contract. Cross currency swaps may require the exchange of notional amounts at the opening and/or closing of the contract. Over the term of the contract, contractually required payments to be paid and to be received are accrued daily and recorded as unrealized depreciation and appreciation until the payments are made, at which time they are realized. Upfront payments and receipts are reflected in the Consolidated Statement of Assets and Liabilities and represent compensating factors between stated terms of the cross currency swap contract and prevailing market conditions (interest rate spreads and other relevant factors). These upfront payments and receipts are amortized over the term of the contract as a realized gain or loss in the Consolidated Statement of Operations.

The Fund entered into OTC total return swap contracts primarily to manage and/or gain exposure to interest rate risk of an underlying instrument such as a stock, bond, index or basket

of securities or indices. A total return swap is an agreement between the Fund and a counterparty to exchange a return linked to an underlying instrument for a floating or fixed rate payment, both based upon a notional amount. Over the term of the contract, contractually required payments to be paid or received are accrued daily and recorded as unrealized appreciation or depreciation until the payments are made, at which time they are recognized as realized gain or loss.

The Fund invests in value recovery instruments (VRI) primarily to gain exposure to economic growth. Periodic payments from VRI are dependent on established benchmarks for underlying variables. VRI has a notional amount, which is used to calculate amounts of payments to holders. Payments are recorded upon receipt as realized gains in the Consolidated Statement of Operations. The risks of investing in VRI include growth risk, liquidity, and the potential loss of investment.

See Note 9 regarding other derivative information.

e. Restricted Cash

At June 30, 2018, the Fund held restricted cash in connection with investments in certain derivative securities. Restricted cash is held in a segregated account with the Fund’s custodian and is reflected in the Consolidated Statement of Assets and Liabilities.

f. Loan Participation Notes

The Fund invests in loan participation notes (Participations). Participations are loans originally issued to a borrower by one or more financial institutions (the Lender) and subsequently sold to other investors, such as the Fund. Participations typically result in the Fund having a contractual relationship only with the Lender and not with the borrower. The Fund has the right to receive from the Lender any payments of principal, interest and fees which the Lender received from the borrower. The Fund generally has no rights to either enforce compliance by the borrower with the terms of the loan agreement or to any collateral relating to the original loan. As a result, the Fund assumes the credit risk of both the borrower and the Lender that is selling the Participation. The Participations may also involve interest rate risk and liquidity risk, including the potential default or insolvency of the borrower and/or the Lender.


		Semiannual Report			FSI-41

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

g. Investments in FT Holdings Corporation III (FT Subsidiary)

The Fund invests in certain financial instruments through its investment in FT Subsidiary. FT Subsidiary is a Delaware Corporation, is a wholly-owned subsidiary of the Fund, and is able to invest in certain financial instruments consistent with the investment objective of the Fund. At June 30, 2018, FT Subsidiary’s investment, Turtle Bay Resort, as well as any other assets and liabilities of FT Subsidiary are reflected in the Fund’s Consolidated Statement of Investments and Consolidated Statement of Assets and Liabilities.

A deferred tax benefit was recorded on the unrealized depreciation of the security. When the Fund disposes of the security, the deferred asset is relieved and the Fund should incur a realized tax benefit. The estimated deferred tax benefit was calculated using a federal rate of 21% and a Hawaii state rate (net of federal tax benefit) of 3%. This is reflected as FT Subsidiary deferred tax benefit in the Consolidated Statement of Assets and Liabilities.

The financial statements have been consolidated and include the accounts of the Fund and FT Subsidiary. All intercompany transactions and balances have been eliminated. At June 30, 2018, the net assets of FT Subsidiary were $6,639,124, representing 1.1% of the Fund’s consolidated net assets. The Fund’s investment in FT Subsidiary is limited to 25% of consolidated assets.

h. Mortgage Dollar Rolls

The Fund enters into mortgage dollar rolls, typically on a TBA basis. Mortgage dollar rolls are agreements between the Fund and a financial institution where the Fund sells (or buys) mortgage-backed securities for delivery on a specified date and simultaneously contracts to repurchase (or sell) substantially similar (same type, coupon, and maturity) securities at a future date and at a predetermined price. Gains or losses are realized on the initial sale, and the difference between the repurchase price and the sale price is recorded as an unrealized gain or loss to the Fund upon entering into the mortgage dollar roll. In addition, the Fund may invest the cash proceeds that are received from the initial sale. During the period between the sale and repurchase, the Fund is not entitled to principal and interest paid on the mortgage backed securities. Transactions in mortgage dollar rolls are accounted for as purchases and sales

and may result in an increase to the Fund’s portfolio turnover rate. The risks of mortgage dollar roll transactions include the potential inability of the counterparty to fulfill its obligations.

i. Senior Floating Rate Interests

j. Income and Deferred Taxes


FSI-42		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

k. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Paydown gains and losses are recorded as an adjustment to interest income. Facility fees are recognized as income over the expected term of the loan. Dividend income is recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Inflation-indexed bonds are adjusted for inflation through periodic increases or decreases in the security’s interest accruals, face amount, or principal redemption value, by amounts corresponding to the rate of inflation as measured by an index. Any increase or decrease in the face amount or principal redemption value will be included as interest income in the Consolidated Statement of Operations.

l. Accounting Estimates

m. Guarantees and Indemnifications


		Semiannual Report			FSI-43

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 1 Shares:
Shares sold		334,481		$	3,713,207			707,945		$	8,170,021
Shares issued in reinvestment of distributions		904,373			9,703,924			1,057,912			11,689,930
Shares redeemed		(2,510,355	)		(27,690,986	)		(5,334,630	)		(59,544,457	)

Net increase (decrease)		(1,271,501	)	$	(14,273,855	)		(3,568,773	)	$	(39,684,506	)


Class 2 Shares:
Shares sold		1,129,752		$	12,049,181			3,399,404		$	36,838,010
Shares issued in reinvestment of distributions		552,570			5,724,625			583,205			6,228,631
Shares redeemed		(1,464,919	)		(15,608,993	)		(3,193,383	)		(34,437,952	)

Net increase (decrease)		217,403		$	2,164,813			789,226		$	8,628,689

Class 4 Shares:
Shares sold		190,580		$	2,115,498			426,432		$	4,757,499
Shares issued in reinvestment of distributions		158,766			1,690,861			189,278			2,076,378
Shares redeemed		(786,993	)		(8,619,800	)		(1,268,068	)		(14,025,922	)

Net increase (decrease)		(437,647	)	$	(4,813,441	)		(652,358	)	$	(7,192,045	)

3. Transactions with Affiliates


Subsidiary		Affiliation
Franklin Advisers, Inc. (Advisers)		Investment manager
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent


FSI-44		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

a. Management Fees

The Fund pays an investment management fee to Advisers based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
0.625%		Up to and including $500 million
0.525%		Over $500 million, up to and including $1 billion
0.480%		Over $1 billion, up to and including $1.5 billion
0.435%		Over $1.5 billion, up to and including $6.5 billion
0.415%		Over $6.5 billion, up to and including $11.5 billion
0.400%		Over $11.5 billion, up to and including $16.5 billion
0.390%		Over $16.5 billion, up to and including $19 billion
0.380%		Over $19 billion, up to and including $21.5 billion
0.370%		In excess of $21.5 billion

For the period ended June 30, 2018, the annualized gross effective investment management fee rate was 0.605% of the Fund’s average daily net assets.

b. Administrative Fees

c. Distribution Fees

The Board has adopted distribution plans for Class 2 and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.25% and 0.35% per year of its average daily net assets of Class 2 and Class 4, respectively. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

Investor Services, under terms of an agreement, performs shareholder servicing for the Fund and is not paid by the Fund for the services.

e. Investments in Affiliated Management Investment Companies

The Fund invests in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the affiliated management investment companies, as noted in the Consolidated Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. Prior to January 1, 2014, the waiver was accounted for as a reduction to management fees. During the period ended June 30, 2018, the Fund held investments in affiliated management investment companies as follows:


	Number of Shares Held at Beginning of Period		Gross Additions		Gross Reductions		Number of Shares Held at End of Period		Value at End of Period		Dividend Income		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)
Non-Controlled Affiliates
Franklin Lower Tier Floating Rate Fund		2,081,861		—		—		2,081,861	$	20,423,054	$	984,337	$	—	$	(395,554	)
Franklin Middle Tier Floating Rate Fund		2,024,951		—		—		2,024,951		19,135,791		714,688		—		(364,491	)


		Semiannual Report		FSI-45

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

3. Transactions with Affiliates (continued)

e. Investments in Affiliated Management Investment Companies (continued)


	Number of Shares Held at Beginning of Period		Gross Additions		Gross Reductions			Number of Shares Held at End of Period		Value at End of Period		Dividend Income		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 1.51%		10,018,679		71,900,296		(73,141,239	)		8,777,736	$	8,777,736	$	81,414	$	—	$	—

Total Affiliated Securities										$	48,336,581	$	1,780,439	$	—	$	(760,045	)

4. Expense Offset Arrangement

5. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains, if any. At December 31, 2017, the capital loss carryforwards, not subject to expiration, were as follows:


Capital loss carryforwards:
Short term	$	1,255,880
Long term		31,844,879

Total capital loss carryforwards	$	33,100,759

At June 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


Cost of investments	$	659,033,853

Unrealized appreciation	$	7,599,565
Unrealized depreciation		(30,908,064	)

Net unrealized appreciation (depreciation)	$	(23,308,499	)

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of foreign currency transactions and bond discounts and premiums.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2018, aggregated $409,973,912 and $432,022,151, respectively.

7. Credit Risk and Defaulted Securities

At June 30, 2018, the Fund had 44.9% of its portfolio invested in high yield, senior secured floating rate notes, or other securities rated below investment grade and unrated securities, if any. These securities may be more sensitive to economic conditions causing greater price volatility and are potentially subject to a greater risk of loss due to default than higher rated securities.


FSI-46		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

The Fund held defaulted securities and/or other securities for which the income has been deemed uncollectible. At June 30, 2018, the aggregate value of these securities was $2,398,500, representing 0.4% of the Fund’s net assets. The Fund discontinues accruing income on securities for which income has been deemed uncollectible and provides an estimate for losses on interest receivable. The securities have been identified in the accompanying Consolidated Statement of Investments.

8. Restricted Securities

At June 30, 2018, investments in restricted securities, excluding securities exempt from registration under the 1933 Act deemed to be liquid, were as follows:


Principal Amount/ Shares	Issuer	Acquisition Date		Cost		Value
14,792,309	K2016470219 South Africa Ltd., A		2/08/13 - 2/01/17	$	114,768	$	10,788
1,472,041	K2016470219 South Africa Ltd., B		2/01/17		1,093		1,074
1,137,987	K2016470219 South Africa Ltd., senior secured note, 144A, PIK, 3.00%, 12/31/22		2/08/13 - 6/30/18		1,878,937		7,007
220,087	K2016470260 South Africa Ltd., senior secured note, 144A, PIK, 25.00%, 12/31/22		2/01/17 - 6/30/18		192,807		19,563

	Total Restricted Securities (Value is 0.0%^†of Net Assets)			$	2,187,605	$	38,432

^†Rounds to less than 0.1% of net assets.

9. Other Derivative Information

At June 30, 2018, the Fund’s investments in derivative contracts are reflected in the Consolidated Statement of Assets and Liabilities as follows:

Asset Derivatives

Liability Derivatives

Derivative Contracts

Not Accounted for

as Hedging Instruments

Consolidated Statement of Assets and
Liabilities Location

Fair Value

Consolidated Statement of Assets and
Liabilities Location

Fair Value

Interest rate contracts

Variation margin on futures contracts

140,753

Variation margin on futures contracts

186,839

Unrealized appreciation on OTC swap contracts

—

Unrealized depreciation on OTC swap contracts

18,610

Foreign exchange contracts

Unrealized appreciation on OTC forward exchange contracts

1,821,781

Unrealized depreciation on OTC forward exchange contracts

1,598,557

Credit contracts

Variation margin on centrally cleared swap contracts

4,666

Variation margin on centrally cleared swap contracts

75,121

OTC swap contracts (premium paid)

549,456

OTC swap contracts (premium received)

1,163,807

Unrealized appreciation on OTC swap contracts

39,775

Unrealized depreciation on OTC swap contracts

815,922


		Semiannual Report			FSI-47

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

9. Other Derivative Information (continued)

Asset Derivatives

Liability Derivatives

Derivative Contracts

Not Accounted for as

Hedging Instruments

Consolidated Statement of Assets and
Liabilities Location

Fair Value

Consolidated Statement of Assets and
Liabilities Location

Fair Value

Value recovery instruments

Investments in securities, at value

$ 1,234,845

Totals

$ 3,791,276

$ 3,858,856

^aThis amount reflects the cumulative appreciation (depreciation) of futures contracts and centrally cleared swap contracts as reported in the Consolidated Statement of Investments. Only the variation margin receivable/payable at period end is separately reported within the Consolidated Statement of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.

^bVRI are included in investments in securities, at value in the Consolidated Statement of Assets and Liabilities.

For the period ended June 30, 2018, the effect of derivative contracts in the Fund’s Consolidated Statement of Operations was as follows:


Derivative Contracts Not Accounted for as Hedging Instruments	Consolidated Statement of Operations Location	Net Realized Gain (Loss) for the Period			Consolidated Statement of Operations Location	Net Change in Unrealized Appreciation (Depreciation) for the Period
	Net realized gain (loss) from:				Net change in unrealized appreciation (depreciation) on:
Interest rate contracts	Futures contracts	$	(153,794	)	Futures contracts	$	(73,783	)
	Swap contracts		(1,614	)	Swap contracts		(18,610	)
Foreign exchange contracts	Forward exchange contracts		(1,008,966	)	Forward exchange contracts		341,237
Credit contracts	Swap contracts		385,212		Swap contracts		(903,998	)
Value recovery instruments	Investments		—		Investments		147,093	^a

Totals		$	(779,162	)		$	(508,061	)

^aVRI are included in net change in unrealized appreciation (depreciation) on investments in the Consolidated Statement of Operations.

For the period ended June 30, 2018, the average month end notional amount of futures contracts and swap contracts and the average month end contract value for forward exchange contracts, and average month end fair value of VRI, were as follows:


Futures Contracts	$	14,887,332
Swap contracts		38,109,829
Forward exchange contracts		92,815,933
VRI		1,292,310


	Gross Amounts of Assets and Liabilities Presented in the Consolidated Statement of Assets and Liabilities
	Assets^a		Liabilities^a
Derivatives
Forward exchange contracts	$	1,821,781	$	1,598,557
Swap contracts		589,231		1,998,339

Total	$	2,411,012	$	3,596,896

^aAbsent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Consolidated Statement of Assets and Liabilities.


FSI-48		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

At June 30, 2018, the Fund’s OTC derivative assets, which may be offset against the Fund’s OTC derivative liabilities and collateral received from the counterparty, are as follows:


			Amounts Not Offset in the Consolidated Statement of Assets and Liabilities
	Gross Amounts of Assets Presented in the Consolidated Statement of Assets and Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Received		Cash Collateral Received^a			Net Amount (Not less than zero)
Counterparty
BZWS	$	201,452	$	(16,758	)	$	—	$	—		$	184,694
CITI		237,561		(237,561	)		—		—			—
DBAB		201,005		(201,005	)		—		—			—
GSCO		—		—			—		—			—
HSBK		18,030		(18,030	)		—		—			—
JPHQ		1,256,347		(1,256,347	)		—		—			—
MSCO		496,617		(411,648	)		—		(84,969	)		—

Total	$	2,411,012	$	(2,141,349	)	$	—	$	(84,969	)	$	184,694

At June 30, 2018, the Fund’s OTC derivative liabilities, which may be offset against the Fund’s OTC derivative assets and collateral pledged to the counterparty, are as follows:


			Amounts Not Offset in the Consolidated Statement of Assets and Liabilities
	Gross Amounts of Liabilities Presented in the Consolidated Statement of Assets and Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Pledged		Cash Collateral Pledged^a			Net Amount (Not less than zero)
Counterparty
BZWS	$	16,758	$	(16,758	)	$	—	$	—		$	—
CITI		1,290,072		(237,561	)		—		(1,050,000	)		2,511
DBAB		458,644		(201,005	)		—		(257,639	)		—
GSCO		16,350		—			—		—			16,350
HSBK		102,773		(18,030	)		—		—			84,743
JPHQ		1,300,651		(1,256,347	)		—		—			44,304
MSCO		411,648		(411,648	)		—		—			—

Total	$	3,596,896	$	(2,141,349	)	$	—	$	(1,307,639	)	$	147,908

^aIn some instances, the collateral amounts disclosed in the table above were adjusted due to the requirement to limit collateral amounts to avoid the effect of overcollateralization. Actual collateral received and/or pledged may be more than the amounts disclosed herein.

See Note 1(d) regarding derivative financial instruments.

See Abbreviations on page FSI-52.

10. Credit Facility


		Semiannual Report			FSI-49

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

10. Credit Facility (continued)

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Consolidated Statement of Operations. During the period ended June 30, 2018, the Fund did not use the Global Credit Facility.

11. Fair Value Measurements

•

Level 1 – quoted prices in active markets for identical financial instruments

•

Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

•

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.


FSI-50		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

A summary of inputs used as of June 30, 2018, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:


	Level 1		Level 2		Level 3			Total

Assets:
Investments in Securities:^a
Equity Investments:^b
Consumer Services	$	—	$	—	$	343,871		$	343,871
Energy		772,667		1,197,744		132			1,970,543
Retailing		—		—		11,862			11,862
Transportation		—		—		161,881			161,881
All Other Equity Investments		39,712,982		—		—			39,712,982
Corporate Bonds:
Retailing		—		5,645,935		7,007			5,652,942
All Other Corporate Bonds		—		284,050,761		—			284,050,761
Senior Floating Rate Interests		—		70,816,825		—			70,816,825
Foreign Government and Agency Securities		—		29,669,787		—			29,669,787
U.S. Government and Agency Securities		—		37,703,784		—			37,703,784
Asset-Backed Securities and Commercial
Mortgage-Backed Securities		—		94,955,114		—			94,955,114
Mortgage-Backed Securities		—		55,781,459		—			55,781,459
Municipal Bonds		—		6,637,104		—			6,637,104
Escrows and Litigation Trusts		—		28,125		—	^c		28,125
Short Term Investments		9,274,400		—		—			9,274,400

Total Investments in Securities	$	49,760,049	$	586,486,638	$	524,753		$	636,771,440

Other Financial Instruments:
Futures Contracts	$	140,753	$	—	$	—		$	140,753
Forward Exchange Contracts		—		1,821,781		—			1,821,781
Swap Contracts		—		44,441		—			44,441

Total Other Financial Instruments	$	140,753	$	1,866,222	$	—		$	2,006,975


Liabilities:
Other Financial Instruments:
Futures Contracts	$	186,839	$	—	$	—		$	186,839
Forward Exchange Contracts		—		1,598,557		—			1,598,557
Swap Contracts.		—		909,653		—			909,653

Total Other Financial Instruments	$	186,839	$	2,508,210	$	—		$	2,695,049

^aFor detailed categories, see the accompanying Consolidated Statement of Investments.

^bIncludes common stocks and management investment companies as well as other equity interests.

^cIncludes securities determined to have no value at June 30, 2018.

A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the beginning and/or end of the period.

12. New Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-08, Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in the ASU shorten the amortization period for certain callable debt securities acquired at a premium, to be amortized to the earliest call date. The ASU does not require an accounting change for securities acquired at a discount, which continues to be amortized to maturity. The ASU is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.


		Semiannual Report			FSI-51

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

13. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the consolidated financial statements and determined that no events have occurred that require disclosure.

Abbreviations


Counterparty		Currency		Selected Portfolio

BZWS	Barclays Bank PLC	BRL	Brazilian Real	ARM	Adjustable Rate Mortgage

CITI	Citigroup, Inc.	EUR	Euro	CLO	Collateralized Loan Obligation

DBAB	Deutsche Bank AG	GBP	British Pound	CMT	1 year Constant Maturity Treasury Index

GSCO	The Goldman Sachs Group, Inc.	IDR	Indonesian Rupiah	FRN	Floating Rate Note

HSBK	HSBC Bank PLC	MXN	Mexican Peso	GDP	Gross Domestic Product

JPHQ	JP Morgan Chase & Co.	USD	United States Dollar	GO	General Obligation

MSCO	Morgan Stanley			HDC	Housing Development Corp.

				LIBOR	London InterBank Offered Rate

				MBS	Mortgage-Backed Security

				PIK	Payment-In-Kind

				RDA	Redevelopment Agency/Authority

				SF	Single Family

				T-Note	Treasury Note

				VRI	Value Recovery Instrument


Index

CDX.EM.Series number		CDX Emerging Markets Index

CDX.NA.HY.Series number		CDX North America High Yield Index

MCDX.NA.Series number		MCDX North America Index


FSI-52		Semiannual Report

Franklin U.S. Government Securities VIP Fund

This semiannual report for Franklin U.S. Government Securities VIP Fund covers the period ended June 30, 2018.

Class 1 Performance Summary as of June 30, 2018

The Fund’s Class 1 Shares had a -0.99% total return for the six-month period ended June 30, 2018.


		Semiannual Report			FUS-1

FRANKLIN U.S. GOVERNMENT SECURITIES VIP FUND

Fund Goal and Main Investments

The Fund seeks income. Under normal market conditions, the Fund invests at least 80% of its net assets in US government securities.

Fund Risks

All investments involve risks, including possible loss of principal. The Fund’s share price and yield will be affected by interest rate movements and mortgage prepayments. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Fund’s primary benchmark, the Bloomberg Barclays US Government Index: Intermediate Component, had a –0.67% total return.¹ The Fund’s secondary benchmark, the Lipper VIP General US Government Funds Classification Average, had a –1.22% total return.² Funds in the Lipper average may allocate as much as 35% of their investments in asset types other than US government and agency mortgage-backed securities.

Economic and Market Overview

The US economy continued to grow during the six months under review. After moderating for three consecutive quarters, the economy grew faster in 2018’s second quarter, driven by consumer spending, exports, business investment and government spending. The manufacturing and services sectors expanded during the period. The unemployment rate declined slightly from 4.1% in December 2017, as reported at the beginning of the six-month period, to 4.0% at period-end.³ Annual inflation, as measured by the Consumer Price Index, increased from 2.1% in December 2017, as reported at the beginning of the period, to 2.9% at period-end.³

Portfolio Composition

Based on Total Net Assets as of 6/30/18

LOGO

1. Source: Morningstar.

2. Source: Lipper, a Thomson Reuters Company.

One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

3. Source: Bureau of Labor Statistics.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).


	FUS-2			Semiannual Report

FRANKLIN U.S. GOVERNMENT SECURITIES VIP FUND

Investment Strategy

Using our straightforward investment approach, we seek to produce current income with a high degree of credit safety from a conservatively managed portfolio of US government securities. Analyzing securities using proprietary and nonproprietary research, we seek to identify attractive investment opportunities.

Manager’s Discussion

From a perspective of excess returns over Treasuries of similar duration as measured by Bloomberg Barclays indexes, all major fixed income sectors related to this portfolio had negative excess returns during the period. US economic indicators were generally encouraging during the reporting period. Steady growth in the services sector created new jobs and boosted employment levels. Retail sales grew for most of the period, while gains in energy prices pulled inflation higher. In this environment, home sales slowed due to low supply levels and rising prices.

The Fund maintains a consistent and disciplined approach to our investment strategy. The Fund’s investment process and strategy have not changed, and the team continues to look for strong cash flow fundamentals and valuations seeking to uncover opportunities across the agency mortgage and agency debenture universe. The Fund emphasizes agency pass-throughs and invests in other agency securities for diversification purposes.

Within the agency mortgage pass-through sector, Freddie Mac MBS, Fannie Mae MBS and GNMA MBS underperformed US Treasuries and posted negative total returns during the period.

During the period, we were more weighted toward GNMA IIs (pools of mortgages from multiple issuers) than GNMA Is (pools of mortgages from single issuers). Over the period, we increased exposure to GNMA II 4.0% coupons, while reducing the exposure to 3.0% coupons. At period-end, our heaviest exposures were in GN II 3.5% and 4.0% coupons. Based on excess returns over Treasuries, coupon performance was mixed. GN II 5.0% securities were among the best performers, while GN I & II 3.5 and 3.0% securities lagged.

The Fund’s exposure security selection in agency fixed-rate mortgages, allocation to Treasury-inflation protected securities (TIPS) and adjustable-rate MBS were contributors during the period. In contrast, our exposure to fixed-rate agency MBS was a detractor. The Fund’s US yield curve positioning was also a detractor during the period as yield curve movements had a negative impact relative to the benchmark.

Thank you for your participation in Franklin U.S. Government Securities VIP Fund. We look forward to serving your future investment needs.


		Semiannual Report			FUS-3

FRANKLIN U.S. GOVERNMENT SECURITIES VIP FUND

Class 1 Fund Expenses

Actual Fund Expenses

The table below provides information about the actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of ongoing Fund expenses but does not include the effect of ongoing Contract expenses, is used to calculate the “Ending Account Value.” You can estimate the Fund-level expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number under the headings “Actual” and “Fund-Level Expenses Paid During Period” (if Fund-Level Expenses Paid During Period were $ 7.50, then 8.6 × $7.50 = $64.50). In this illustration, the estimated expenses paid this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Actual
(actual return after expenses)

Hypothetical
(5% annual return before expenses)

Share Class

Beginning Account
Value 1/1/18

Ending Account
Value 6/30/18

Fund-Level
Expenses Paid
During Period
1/1/18–6/30/18^1,2

Ending Account
Value 6/30/18

Fund-Level
Expenses Paid
During Period
1/1/18–6/30/18^1,2

Annualized
Expense
Ratio²

Class 1

$1,000

$990.10

$2.47

$1,022.32

$2.51

0.50%

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above — in the far right column — multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.

2. Does not include any ongoing expenses of the Contract for which the Fund is an investment option or acquired fund fees and expenses.


FUS-4		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin U.S. Government Securities VIP Fund


	Six Months Ended June 30, 2018			Year Ended December 31,
	(unaudited)			2017			2016			2015			2014			2013
Class 1
Per share operating performance
(for a share outstanding throughout the period)

Net asset value, beginning of period		$12.36			$12.51			$12.74			$13.00			$12.91			$13.57


Income from investment operations^a:

Net investment income^b		0.14			0.25			0.22			0.21			0.24			0.24

Net realized and unrealized gains (losses)		(0.26	)		(0.04	)		(0.10	)		(0.12	)		0.22			(0.51	)

Total from investment operations		(0.12	)		0.21			0.12			0.09			0.46			(0.27	)

Less distributions from net investment income		(0.36	)		(0.36	)		(0.35	)		(0.35	)		(0.37	)		(0.39	)

Net asset value, end of period		$11.88			$12.36			$12.51			$12.74			$13.00			$12.91


Total return^c		(0.99)%			1.66%			0.90%			0.71%			3.64%			(1.99)%

Ratios to average net assets^d

Expenses^e		0.50%			0.50%			0.50%			0.50%			0.49%			0.49%

Net investment income		2.37%			2.00%			1.75%			1.64%			1.84%			1.84%

Supplemental data

Net assets, end of period (000’s)		$62,259			$66,404			$73,695			$79,620			$90,656			$99,947

Portfolio turnover rate		18.65%			80.49%			86.28%			61.91%			42.88%			69.47%

Portfolio turnover rate excluding mortgage dollar rolls^f		18.65%			80.49%			86.28%			61.91%			42.88%			67.80%

^bBased on average daily shares outstanding.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fSee Note 1(c) regarding mortgage dollar rolls.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FUS-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin U.S. Government Securities VIP Fund (continued)


	Six Months Ended June 30, 2018			Year Ended December 31,
	(unaudited)			2017			2016			2015			2014			2013
Class 2
Per share operating performance
(for a share outstanding throughout the period)

Net asset value, beginning of period		$12.09			$12.24			$12.47			$12.73			$12.65			$13.31


Income from investment operations^a:

Net investment income^b		0.12			0.21			0.19			0.18			0.20			0.21

Net realized and unrealized gains (losses)		(0.25	)		(0.04	)		(0.10	)		(0.12	)		0.22			(0.50	)


Total from investment operations		(0.13	)		0.17			0.09			0.06			0.42			(0.29	)


Less distributions from net investment income		(0.33	)		(0.32	)		(0.32	)		(0.32	)		(0.34	)		(0.37	)


Net asset value, end of period		$11.63			$12.09			$12.24			$12.47			$12.73			$12.65


Total return^c		(1.02)%			1.34%			0.66%			0.47%			3.38%			(2.24)%

Ratios to average net assets^d

Expenses^e		0.75%			0.75%			0.75%			0.75%			0.74%			0.74%

Net investment income		2.12%			1.75%			1.50%			1.39%			1.59%			1.59%

Supplemental data

Net assets, end of period (000’s)		$1,159,208			$1,223,491			$1,268,963			$1,311,974			$1,369,037			$1,267,994

Portfolio turnover rate		18.65%			80.49%			86.28%			61.91%			42.88%			69.47%

Portfolio turnover rate excluding mortgage dollar rolls^f		18.65%			80.49%			86.28%			61.91%			42.88%			67.80%

^bBased on average daily shares outstanding.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fSee Note 1(c) regarding mortgage dollar rolls.


FUS-6		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2018 (unaudited)

Franklin U.S. Government Securities VIP Fund


		Principal Amount		Value
	Mortgage-Backed Securities 79.8%
a	Federal Home Loan Mortgage Corp. (FHLMC) Adjustable Rate 1.2%
	FHLMC, 3.759%, (12-month USD LIBOR +/- MBS Margin), 4/01/40	$	6,370,168	$	6,672,640
	FHLMC, 4.011%, (US 1 Year CMT T-Note +/- MBS Margin), 5/01/37		718,505		755,307
	FHLMC, 3.762% - 4.41%, (12-month USD LIBOR +/- MBS Margin), 3/01/36 - 5/01/38		7,202,663		7,560,214

					14,988,161

	Federal Home Loan Mortgage Corp. (FHLMC) Fixed Rate 10.6%
	FHLMC Gold 15 Year, 4.50%, 3/01/25 - 4/01/25		982,689		1,004,156
	FHLMC Gold 30 Year, 3.00%, 5/01/43		468,822		457,727
	FHLMC Gold 30 Year, 3.00%, 6/01/46		37,246,752		36,105,207
	FHLMC Gold 30 Year, 3.00%, 10/01/46		26,350,929		25,539,225
	FHLMC Gold 30 Year, 3.50%, 3/01/32 - 5/01/43		3,778,577		3,832,205
	FHLMC Gold 30 Year, 3.50%, 12/01/47		7,725,814		7,689,084
	FHLMC Gold 30 Year, 3.50%, 1/01/48		14,578,068		14,510,879
	FHLMC Gold 30 Year, 4.00%, 9/01/40 - 1/01/48		11,862,893		12,169,034
	FHLMC Gold 30 Year, 4.00%, 5/01/48		3,967,802		4,048,290
	FHLMC Gold 30 Year, 4.00%, 7/01/48		13,615,782		13,888,872
	FHLMC Gold 30 Year, 4.50%, 5/01/40 - 7/01/41		2,477,629		2,603,062
	FHLMC Gold 30 Year, 5.00%, 9/01/33 - 4/01/40		4,684,889		5,004,595
	FHLMC Gold 30 Year, 5.50%, 7/01/33 - 5/01/38		1,186,332		1,284,860
	FHLMC Gold 30 Year, 6.00%, 1/01/24 - 8/01/35		800,091		878,595
	FHLMC Gold 30 Year, 6.50%, 12/01/23 - 5/01/35		406,122		452,587
	FHLMC Gold 30 Year, 7.00%, 4/01/24 - 9/01/31		137,161		148,572
	FHLMC Gold 30 Year, 7.50%, 12/01/22		424		428
	FHLMC Gold 30 Year, 8.00%, 9/01/21 - 5/01/22		2,423		2,559
	FHLMC Gold 30 Year, 8.50%, 10/01/21 - 7/01/31		298,650		347,654
	FHLMC PC 30 Year, 8.50%, 9/01/20		83		83

					129,967,674

a	Federal National Mortgage Association (FNMA) Adjustable Rate 4.4%
	FNMA, 3.671%, (12-month USD LIBOR +/- MBS Margin), 8/01/36		5,737,600		6,005,268
	FNMA, 2.67% - 3.724%, (US 1 Year CMT T-Note +/- MBS Margin), 9/01/18 - 10/01/44		8,009,633		8,404,606
	FNMA, 3.028% - 3.818%, (12-month USD LIBOR +/- MBS Margin), 1/01/19 - 1/01/40		6,665,292		6,946,808
	FNMA, 4.039%, (12-month USD LIBOR +/- MBS Margin), 9/01/37		15,500,481		16,394,190
	FNMA, 3.21% - 4.133%, (US 3 Year CMT T-Note +/- MBS Margin), 3/01/20 - 3/01/29		38,448		38,901
	FNMA, 2.064% - 5.437%, (11th District COF +/- MBS Margin), 9/01/19 - 6/01/38		169,378		171,930
	FNMA, 2.901% - 5.793%, (6-month USD LIBOR +/- MBS Margin), 6/01/21 - 7/01/37		1,162,164		1,193,329
	FNMA, 3.835% - 5.875%, (12-month USD LIBOR +/- MBS Margin), 3/01/33 - 3/01/47		8,145,479		8,546,985
	FNMA, 3.725% - 7.22%, (US 1 Year CMT T-Note +/- MBS Margin), 7/01/19 - 12/01/40		5,320,138		5,576,116

					53,278,133

	Federal National Mortgage Association (FNMA) Fixed Rate 12.0%
	FNMA 15 Year, 2.64%, 7/01/25		2,500,000		2,408,353
	FNMA 15 Year, 2.77%, 4/01/25		3,500,000		3,396,839
	FNMA 15 Year, 2.99%, 11/01/24		2,971,843		2,934,669
	FNMA 15 Year, 3.14%, 10/01/25		4,000,000		3,981,863
	FNMA 15 Year, 3.28%, 7/01/27		4,000,000		3,931,332
	FNMA 15 Year, 3.51%, 8/01/23		3,000,000		3,060,604
	FNMA 15 Year, 5.50%, 1/01/25		963,339		1,005,774
	FNMA 30 Year, 3.00%, 12/01/42		198,329		193,391
	FNMA 30 Year, 3.00%, 9/01/47		19,301,810		18,726,749
	FNMA 30 Year, 3.50%, 7/01/45		34,633,220		34,574,429
	FNMA 30 Year, 4.00%, 1/01/41 - 8/01/41		7,985,676		8,204,825
	FNMA 30 Year, 4.00%, 4/01/48		44,458,707		45,404,853


		Semiannual Report			FUS-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)


	Principal Amount		Value
Mortgage-Backed Securities (continued)
Federal National Mortgage Association (FNMA) Fixed Rate (continued)
FNMA 30 Year, 4.50%, 8/01/40 - 6/01/41	$	7,936,326	$	8,348,494
FNMA 30 Year, 5.00%, 3/01/34 - 7/01/41		4,476,063		4,799,330
FNMA 30 Year, 5.50%, 12/01/32 - 8/01/35		1,815,611		1,961,452
FNMA 30 Year, 6.00%, 1/01/24 - 8/01/38		2,009,188		2,202,516
FNMA 30 Year, 6.50%, 1/01/24 - 9/01/36		363,920		401,389
FNMA 30 Year, 7.50%, 4/01/23 - 8/01/25		16,093		16,456
FNMA 30 Year, 8.00%, 3/01/22 - 12/01/24		76,333		77,572
FNMA 30 Year, 8.50%, 3/01/20 - 6/01/21		272		277
FNMA 30 Year, 9.00%, 10/01/26		79,937		83,582
FNMA PL 30 Year, 5.50%, 4/01/34		1,146,830		1,203,124

				146,917,873

Government National Mortgage Association (GNMA) Fixed Rate 51.6%
GNMA I SF 30 Year, 3.00%, 7/15/42		537,755		528,684
GNMA I SF 30 Year, 4.00%, 10/15/40 - 8/15/46		11,138,582		11,490,520
GNMA I SF 30 Year, 4.50%, 1/15/39 - 6/15/40		10,754,163		11,368,271
GNMA I SF 30 Year, 4.50%, 7/15/40 - 6/15/41		4,446,098		4,700,107
GNMA I SF 30 Year, 5.00%, 6/15/30 - 11/15/39		11,378,435		12,103,185
GNMA I SF 30 Year, 5.00%, 11/15/39 - 9/15/40		11,464,409		12,198,092
GNMA I SF 30 Year, 5.50%, 12/15/28 - 10/15/39		5,633,039		6,131,817
GNMA I SF 30 Year, 6.00%, 11/15/23 - 11/15/38		2,844,991		3,142,930
GNMA I SF 30 Year, 6.50%, 6/15/23 - 9/15/38		1,438,816		1,593,518
GNMA I SF 30 Year, 7.00%, 9/15/22 - 1/15/32		374,857		390,663
GNMA I SF 30 Year, 7.50%, 2/15/22 - 8/15/33		420,929		469,161
GNMA I SF 30 Year, 8.00%, 12/15/21 - 7/15/23		93,832		95,575
GNMA I SF 30 Year, 8.50%, 6/15/22 - 12/15/24		37,483		38,162
GNMA I SF 30 Year, 9.00%, 9/15/19 - 3/15/20		651		653
GNMA I SF 30 Year, 9.50%, 1/15/20 - 12/15/20		12,328		12,477
GNMA I SF 30 Year, 10.00%, 9/15/18 - 8/15/21		3,753		3,771
GNMA II SF 30 Year, 3.00%, 12/20/42 - 2/20/45		2,546,000		2,514,686
GNMA II SF 30 Year, 3.00%, 9/20/45		10,334,271		10,168,567
GNMA II SF 30 Year, 3.00%, 7/20/47		22,800,909		22,336,997
GNMA II SF 30 Year, 3.00%, 9/20/47		28,842,415		28,243,843
GNMA II SF 30 Year, 3.50%, 12/20/40 - 8/20/43		2,573,733		2,604,337
GNMA II SF 30 Year, 3.50%, 8/20/42		7,179,325		7,264,697
GNMA II SF 30 Year, 3.50%, 9/20/42		20,839,022		21,086,830
GNMA II SF 30 Year, 3.50%, 10/20/42		6,367,792		6,443,516
GNMA II SF 30 Year, 3.50%, 11/20/42		12,467,057		12,615,311
GNMA II SF 30 Year, 3.50%, 12/20/42		9,412,876		9,524,812
GNMA II SF 30 Year, 3.50%, 1/20/43		15,853,960		16,042,589
GNMA II SF 30 Year, 3.50%, 3/20/43		5,692,347		5,760,042
GNMA II SF 30 Year, 3.50%, 4/20/43		7,124,926		7,209,658
GNMA II SF 30 Year, 3.50%, 5/20/43		13,097,167		13,252,926
GNMA II SF 30 Year, 3.50%, 6/20/43		5,979,465		6,050,576
GNMA II SF 30 Year, 3.50%, 9/20/47		94,260,543		94,707,046
GNMA II SF 30 Year, 3.50%, 10/20/47		7,714,459		7,751,001
GNMA II SF 30 Year, 3.50%, 11/20/47		139,483,023		140,143,740
GNMA II SF 30 Year, 4.00%, 11/20/39 - 7/20/41		11,426,025		11,828,159
GNMA II SF 30 Year, 4.00%, 9/20/41 - 2/20/44		4,225,666		4,356,423
GNMA II SF 30 Year, 4.00%, 11/20/41		6,979,969		7,219,526
GNMA II SF 30 Year, 4.00%, 1/20/48		9,769,931		10,024,452
GNMA II SF 30 Year, 4.00%, 4/20/48		63,545,515		65,200,970


FUS-8		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)


	Principal Amount		Value
Mortgage-Backed Securities (continued)
Government National Mortgage Association (GNMA) Fixed Rate (continued)
GNMA II SF 30 Year, 4.50%, 10/20/39 - 6/20/41	$	10,784,168	$	11,341,070
GNMA II SF 30 Year, 4.50%, 7/20/41 - 2/20/44		10,776,714		11,342,591
GNMA II SF 30 Year, 4.50%, 9/20/41		5,517,914		5,807,741
GNMA II SF 30 Year, 4.50%, 10/20/44		2,984,014		3,144,736
GNMA II SF 30 Year, 5.00%, 9/20/33 - 10/20/42		9,225,524		9,904,279
GNMA II SF 30 Year, 5.00%, 6/20/44		2,862,359		3,048,829
GNMA II SF 30 Year, 5.50%, 5/20/34 - 6/20/38		4,638,950		5,048,380
GNMA II SF 30 Year, 6.00%, 11/20/23 - 7/20/39		2,931,387		3,247,238
GNMA II SF 30 Year, 6.50%, 12/20/27 - 4/20/34		463,030		516,023
GNMA II SF 30 Year, 7.00%, 5/20/32		8,291		9,571
GNMA II SF 30 Year, 7.50%, 9/20/22 - 5/20/33		82,647		89,527
GNMA II SF 30 Year, 8.00%, 8/20/26		5,431		6,215
GNMA II SF 30 Year, 9.50%, 4/20/25		1,998		2,005


				630,126,495

Total Mortgage-Backed Securities (Cost $1,001,272,993)				975,278,336


U.S. Government and Agency Securities 17.8%
Federal Agricultural Mortgage Corp.,
4.30%, 5/13/19		1,010,000		1,026,879
1.41%, 3/06/20		10,000,000		9,815,440
2.66%, 4/12/22		7,000,000		6,972,504
FHLB, 2.625%, 9/12/25		20,000,000		19,464,680
FICO,
13P, Strip, 12/27/18		2,500,000		2,471,443
15P, Strip, 3/07/19		1,798,000		1,769,117
D-P, Strip, 9/26/19		7,605,000		7,373,561
E-P, Strip, 11/02/18		8,896,000		8,828,731
Israel Government Agency for International Development Bond, 5.50%, 9/18/23		12,000,000		13,512,506
7-Z, U.S. Government Guaranteed, Strip, 8/15/22		5,619,000		5,016,355
New Valley Generation IV, secured bond, 4.687%, 1/15/22		1,474,708		1,524,125
Overseas Private Investment Corp., A, zero cpn., 11/15/20		2,575,000		3,108,107
Petroleos Mexicanos, 2.378%, 4/15/25 (Mexico)		2,303,000		2,258,264
Private Export Funding Corp.,
secured bond, 2.80%, 5/15/22		9,000,000		8,979,750
secured note, 4.30%, 12/15/21		1,865,000		1,950,706
secured note, LL, 2.25%, 3/15/20		1,700,000		1,688,607
senior secured note, MM, 2.30%, 9/15/20		3,500,000		3,458,767
Reliance Industries Ltd., senior bond, 2.512%, 1/15/26 (India)		10,500,000		10,299,240
SBA, PC, 1998-20I, 1, 6.00%, 9/01/18		29,965		30,046
Tunisia Government Agency for International Development Bonds, 1.686%, 7/16/19		7,000,000		6,970,355
TVA,
1.875%, 8/15/22		6,000,000		5,805,078
5.88%, 4/01/36		5,000,000		6,554,790
Strip, 11/01/18		2,644,000		2,623,687
Strip, 6/15/19		5,973,000		5,816,470
Strip, 6/15/20		6,138,000		5,808,143


		Semiannual Report			FUS-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)


		Principal Amount		Value
	U.S. Government and Agency Securities (continued)
	U.S. Treasury Bond,
	2.50%, 2/15/46	$	4,000,000	$	3,633,906
b	Index Linked, 2.00%, 1/15/26		1,893,260		2,074,908
b	Index Linked, 1.75%, 1/15/28		9,566,288		10,456,315
b	Index Linked, 3.625%, 4/15/28		7,744,310		9,839,632
	U.S. Treasury Note,
	2.375%, 8/15/24		22,000,000		21,476,641
	2.25%, 8/15/27		6,000,000		5,709,844
b	Index Linked, 0.125%, 7/15/24		16,352,987		15,901,191
	Ukraine Government Agency for International Development Bonds, 1.844%, 5/16/19		5,000,000		4,987,420


	Total U.S. Government and Agency Securities (Cost $220,058,541)				217,207,208


	Total Investments before Short Term Investments (Cost $1,221,331,534)				1,192,485,544

	Short Term Investments (Cost $20,573,815) 1.7%
	Repurchase Agreements 1.7%
c	Joint Repurchase Agreement, 2.10%, 7/02/18 (Maturity Value $20,577,415) BNP Paribas Securities Corp. (Maturity Value $7,384,411) Deutsche Bank Securities Inc. (Maturity Value $270,182) HSBC Securities (USA) Inc. (Maturity Value $12,922,822) Collateralized by U.S. Government Agency Securities, 0.00% - 3.625%, 9/18/18 - 6/19/23; ^dU.S. Treasury Bill, 10/04/18 - 10/18/18; and U.S. Treasury Note, 2.00% - 3.50%, 5/15/20 - 8/31/21 (valued at $20,996,991)		20,573,815		20,573,815

	Total Investments (Cost $1,241,905,349) 99.3%				1,213,059,359
	Other Assets, less Liabilities 0.7%				8,408,088

	Net Assets 100.0%			$	1,221,467,447

See Abbreviations on page FUS-19.

^aAdjustable Rate Mortgage-Backed Security (ARM); the rate shown is the effective rate at period end. ARM rates are not based on a published reference rate and spread, but instead pass-through weighted average interest income inclusive of any caps or floors, if applicable, from the underlying mortgage loans in which the majority of mortgages pay interest based on the index shown at their designated reset dates plus a spread, less the applicable servicing and guaranty fee (MBS margin).

^bPrincipal amount of security is adjusted for inflation. See Note 1(e).

^cSee Note 1(b) regarding joint repurchase agreement.

^dThe security was issued on a discount basis with no stated coupon rate.


FUS-10		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2018 (unaudited)


	Franklin U.S. Government Securities VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	1,221,331,534
Cost - Unaffiliated repurchase agreements		20,573,815

Value - Unaffiliated issuers	$	1,192,485,544
Value - Unaffiliated repurchase agreements		20,573,815
Receivables:
Investment securities sold		5,707,945
Capital shares sold		144,096
Interest		4,232,087
Other assets		813

Total assets		1,223,144,300

Liabilities:
Payables:
Capital shares redeemed		529,436
Management fees		472,464
Distribution fees		487,027
Reports to shareholders		90,642
Accrued expenses and other liabilities		97,284

Total liabilities		1,676,853

Net assets, at value	$	1,221,467,447

Net assets consist of:
Paid-in capital	$	1,327,344,322
Undistributed net investment income		10,351,671
Net unrealized appreciation (depreciation)		(28,845,990	)
Accumulated net realized gain (loss)		(87,382,556	)

Net assets, at value	$	1,221,467,447


Class 1:
Net assets, at value	$	62,259,427

Shares outstanding		5,239,030

Net asset value and maximum offering price per share	$	11.88


Class 2:
Net assets, at value	$	1,159,208,020

Shares outstanding		99,699,380

Net asset value and maximum offering price per share	$	11.63


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FUS-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2018 (unaudited)


	Franklin U.S. Government Securities VIP Fund
Investment income:
Interest:
Unaffiliated issuers:
Paydown gain (loss)	$	(3,002,903	)
Paid in cash		20,847,362

Total investment income		17,844,459

Expenses:
Management fees (Note 3a)		2,925,917
Distribution fees: (Note 3c)
Class 2		1,477,684
Custodian fees (Note 4)		5,503
Reports to shareholders		69,052
Professional fees		36,541
Trustees’ fees and expenses		3,288
Other		69,651

Total expenses		4,587,636
Expense reductions (Note 4)		(200	)

Net expenses		4,587,436

Net investment income		13,257,023

Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		(2,700,396	)

Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(24,797,930	)

Net realized and unrealized gain (loss)		(27,498,326	)

Net increase (decrease) in net assets resulting from operations	$	(14,241,303	)


FUS-12		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets


	Franklin U.S. Government Securities VIP Fund
	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	13,257,023		$	23,425,605
Net realized gain (loss)		(2,700,396	)		(9,244,107	)
Net change in unrealized appreciation (depreciation)		(24,797,930	)		4,564,648

Net increase (decrease) in net assets resulting from operations		(14,241,303	)		18,746,146

Distributions to shareholders from:
Net investment income:
Class 1		(1,830,491	)		(2,011,168	)
Class 2		(31,691,784	)		(33,122,555	)

Total distributions to shareholders		(33,522,275	)		(35,133,723	)

Capital share transactions: (Note 2)
Class 1		(1,659,895	)		(6,455,480	)
Class 2		(19,003,872	)		(29,919,965	)

Total capital share transactions		(20,663,767	)		(36,375,445	)

Net increase (decrease) in net assets		(68,427,345	)		(52,763,022	)
Net assets:
Beginning of period		1,289,894,792			1,342,657,814

End of period	$	1,221,467,447		$	1,289,894,792

Undistributed net investment income included in net assets:
End of period	$	10,351,671		$	30,616,923


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			FUS-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin U.S. Government Securities VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eighteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin U.S. Government Securities VIP Fund (Fund) is included in this report. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. At June 30, 2018, 43.6% of the Fund’s shares were held through one insurance company. Investment activities of these insurance company separate accounts could have a material impact on the Fund. The Fund offers two classes of shares: Class 1 and Class 2. Each class of shares may differ by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Debt securities generally trade in the over-the-counter market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair

value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value.

Investments in repurchase agreements are valued at cost, which approximates fair value.

b. Joint Repurchase Agreement


FUS-14		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)

the funds, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Fund, certain MRAs may permit the non-defaulting party to net and close-out all transactions, if any, traded under such agreements. The Fund may sell securities it holds as collateral and apply the proceeds towards the repurchase price and any other amounts owed by the seller to the Fund in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls below the repurchase price owed by the seller. The joint repurchase agreement held by the Fund at period end, as indicated in the Statement of Investments, had been entered into on June 29, 2018.

c. Mortgage Dollar Rolls

d. Income Taxes

e. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Paydown gains and losses are recorded separately in the Statement of Operations. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.


		Semiannual Report			FUS-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)

1. Organization and Significant Accounting

Policies (continued)

e. Security Transactions, Investment Income, Expenses and Distributions (continued)

an index. Any increase or decrease in the face amount or principal redemption value will be included as interest income in the Statement of Operations.

f. Accounting Estimates

g. Guarantees and Indemnifications

2. Shares of Beneficial Interest

At June 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 1 Shares:
Shares sold		79,910		$	974,342			214,758		$	2,678,926
Shares issued in reinvestment of distributions		154,472			1,830,491			163,377			2,011,168
Shares redeemed		(366,821	)		(4,464,728	)		(896,031	)		(11,145,574	)

Net increase (decrease)		(132,439	)	$	(1,659,895	)		(517,896	)	$	(6,455,480	)


Class 2 Shares:
Shares sold		3,116,396		$	37,136,911			7,795,899		$	95,146,101
Shares issued in reinvestment of distributions		2,734,408			31,691,784			2,748,760			33,122,555
Shares redeemed		(7,388,399	)		(87,832,567	)		(12,993,385	)		(158,188,621	)

Net increase (decrease)		(1,537,595	)	$	(19,003,872	)		(2,448,726	)	$	(29,919,965	)

3. Transactions with Affiliates


Subsidiary		Affiliation
Franklin Advisers, Inc. (Advisers)		Investment manager
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent


FUS-16		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)

a. Management Fees

The Fund pays an investment management fee to Advisers based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
0.625%		Up to and including $100 million
0.500%		Over $100 million, up to and including $250 million
0.450%		Over $250 million, up to and including $7.5 billion
0.440%		Over $7.5 billion, up to and including $10 billion
0.430%		Over $10 billion, up to and including $12.5 billion
0.420%		Over $12.5 billion, up to and including $15 billion
0.400%		In excess of $15 billion

For the period ended June 30, 2018, the annualized gross effective investment management fee rate was 0.470% of the Fund’s average daily net assets.

b. Administrative Fees

c. Distribution Fees

d. Transfer Agent Fees

Investor Services, under terms of an agreement, performs shareholder servicing for the Fund and is not paid by the Fund for the services.

4. Expense Offset Arrangement

5. Income Taxes


		Semiannual Report			FUS-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)

5. Income Taxes (continued)

At December 31, 2017, capital loss carryforwards were as follows:


Capital loss carryforwards subject to expiration:
2018	$	426,637
Capital loss carryforwards not subject to expiration:
Short Term		34,314,790
Long Term		49,844,292

Total capital loss carryforwards	$	84,585,719

At June 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


Cost of investments	$	1,244,873,669
Unrealized appreciation	$	5,263,511
Unrealized depreciation		(37,077,821	)

Net unrealized appreciation (depreciation)	$	(31,814,310	)

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of paydown losses and bond discounts and premiums.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2018, aggregated $229,265,403 and $268,157,896, respectively.

7. Credit Facility

8. Fair Value Measurements

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)


FUS-18		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

At June 30, 2018, all of the Fund’s investments in financial instruments carried at fair value were valued using Level 2 inputs.

9. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations


Currency		Selected Portfolio

USD	United States Dollar	CMT	Constant Maturity Treasury Index

		COF	Cost of Funds

		FHLB	Federal Home Loan Bank

		FICO	Financing Corp.

		LIBOR	London InterBank Offered Rate

		MBS	Mortgage-Backed Security

		PC	Participation Certificate

		PL	Project Loan

		SBA	Small Business Administration

		SF	Single Family

		T-Note	Treasury Note

		TVA	Tennessee Valley Authority


		Semiannual Report			FUS-19

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Templeton Developing Markets VIP Fund

This semiannual report for Templeton Developing Markets VIP Fund covers the period ended June 30, 2018.

Class 1 Performance Summary as of June 30, 2018

The Fund’s Class 1 Shares had a –7.69% total return* for the six-month period ended June 30, 2018.


		Semiannual Report			TD-1

TEMPLETON DEVELOPING MARKETS VIP FUND

Fund Goal and Main Investments

The Fund seeks long-term capital appreciation. Under normal market conditions, the Fund invests at least 80% of its net assets in emerging market investments.

Fund Risks

All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets, of which frontier markets are a subset, involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Because these frameworks are typically even less developed in frontier markets, as well as various factors including the increased potential for extreme price volatility, illiquidity, trade barriers and exchange controls, the risks associated with developing markets are magnified in frontier markets. The Fund is designed for the aggressive portion of a well-diversified portfolio. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the MSCI Emerging Markets (EM) Index had a -6.51% total return, and the Standard & Poor’s^®/International Finance Corporation Investable Composite Index had a -6.31% total return for the same period.¹ Please note, index performance numbers are for reference and we do not attempt to track an index but rather undertake investments on the basis of fundamental research.

Economic and Market Overview

Emerging market economies in general continued to grow faster than developed market economies during the six months under review. China’s economy grew slightly slower in 2018’s first half compared to the second half of 2017, amid faster growth in consumer spending and slower growth in industrial production, the service industry and fixed-asset investment.

Geographic Composition

Based on Total Net Assets as of 6/30/18

LOGO

India’s annualized growth rate in 2018’s first quarter was the highest it has been since 2016’s second quarter, driven by growth in investment, manufacturing and construction. Russia’s economy grew in 2018’s first quarter compared to the prior-year period, driven by higher oil prices and growth in financials and insurance, real estate and public administration, though US sanctions and a decline in construction weighed on the economy. Brazil’s economy grew in 2018’s first quarter compared to the prior-year period, though fixed-asset investment growth slowed and government spending contracted. South Africa’s economy contracted in the first quarter of 2018 and grew at its slowest annualized rate since 2016’s second quarter, with slowing growth in manufacturing and a decline in mining being the main factors. South Korea’s economy grew in 2018’s first quarter compared to the prior-year period, as did Poland’s and Mexico’s economies.

Monetary policies varied among emerging market central banks. Brazil’s, Russia’s and South Africa’s central banks cut their benchmark interest rates during the six-month period, while some, including those of India, Turkey and the Czech Republic, raised their benchmark rates. Mexico’s central bank raised its benchmark rate twice during the period to ameliorate risk factors for inflation amid uncertainty around the renegotiations of the North American Free Trade Agreement and the country’s presidential election in July. China’s, South Korea’s and Taiwan’s central banks left their benchmark interest rates unchanged during the period.

1. Source: Morningstar.

One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).


TD-2		Semiannual Report

TEMPLETON DEVELOPING MARKETS VIP FUND

Emerging market stocks declined during the six months under review due to investor concerns over rising US interest rates, a strengthening US dollar and rising global trade tensions, particularly between the US and China. Emerging market European stocks were pressured by political instability in Italy, and Asian stocks were hurt by increased tensions in the Korean peninsula, although tensions eased later in the period. However, continued solid earnings performance by many emerging market companies, MSCI’s addition of Chinese A-share companies to the MSCI EM Index and MSCI’s decision to add Saudi Arabia to the same index in 2019 — which could boost investment across the Middle East — offered some encouragement to investors. In this environment, emerging market stocks, as measured by the MSCI EM Index, had a -6.51% total return for the six months ended June 30, 2018.¹

Investment Strategy

We employ a fundamental research, value-oriented, long-term investment approach. We focus on the market price of a company’s securities relative to our evaluation of its long-term earnings, asset value and cash flow potential. We also consider a company’s profit and loss outlook, balance sheet strength, cash flow trends and asset value in relation to the current price of the company’s securities. Our analysis considers the company’s corporate governance behavior as well as its position in its sector, the economic framework and political environment.

Manager’s Discussion

During the six months under review, key contributors to the Fund’s absolute performance included Fila Korea, Uni-President China Holdings and China Petroleum & Chemical (Sinopec).

Fila Korea is one of South Korea’s leading sportswear companies. It also licenses the FILA brand around the world and owns a stake in US golf product manufacturer Acushnet. Shares of Fila Korea advanced as the company’s efforts to revitalize its domestic business and expand in China helped improve quarterly earnings. Steady financial results from Acushnet also buoyed the stock.

Uni-President China is a leading beverage and instant noodle manufacturer in its home market. It is a unit of Uni-President Enterprises, a food and beverage conglomerate in Taiwan. Shares of Uni-President China rose amid stronger full-year 2017 earnings as the company took steps to raise its profitability. As part of its strategy, it phased out underperforming products and increased its focus on higher margin brands.


Top 10 Countries
6/30/18
	% of Total Net Assets
China		22.8%
South Korea		17.2%
Taiwan		10.6%
South Africa		8.8%
Russia		8.0%
India		6.3%
Brazil		4.3%
Thailand		3.9%
U.K.		3.0%
Indonesia		2.9%

Sinopec is one of China’s largest integrated energy and chemical companies. It is engaged in oil and gas exploration and production. It also manufactures and markets petrochemicals and other chemical products. Sinopec shares benefited from soaring oil prices, with Brent crude oil touching US$80 per barrel during the period under review. The company also reported robust quarterly earnings.

In contrast, key detractors from the Fund’s absolute performance included Brilliance China Automotive Holdings, Samsung Electronics and Naspers.

Brilliance China Automotive manufactures and sells automobiles for the Chinese domestic market, predominantly through its joint venture with German luxury car maker BMW. Brilliance China’s share price weakened as its full-year 2017 profit growth missed market expectations. China’s plans to remove foreign ownership limits and reduce import tariffs in the auto industry also weighed on the stock. Overall, however, rising wealth in China continued to underpin sales of premium cars in the country, and Brilliance China unveiled plans for new launches to meet consumer demand.

Samsung Electronics is a South Korea-based consumer electronics and semiconductor manufacturer. It is one of the world’s largest smartphone and memory chip producers as well as a key supplier of organic light-emitting diode (OLED) displays. Shares of the export-focused company were caught in the crosshairs of mounting global trade tensions. Concerns that Samsung could reduce its production of OLED smartphone panels amid weak demand for Apple’s iPhone X also created selling pressure. The stock’s decline was capped as Samsung reported better-than-expected quarterly earnings, thanks to strength in its semiconductor business.


		Semiannual Report			TD-3

TEMPLETON DEVELOPING MARKETS VIP FUND

Naspers is an internet and media group based in South Africa. It is a leading provider of pay-television services in sub-Saharan Africa. It also has sizable investments in some of the world’s leading technology companies, including China-based Tencent Holdings and Russia-based Mail.Ru Group. Shares of Naspers retreated as it trimmed its stake in Tencent to raise cash for e-commerce investments. Nevertheless, it retains a considerable stake in Tencent and its results for fiscal-year 2018 (ended March 31) were significantly lifted by the Chinese company’s strong performance.

It is important to recognize the effect of currency movements on the Fund’s performance. In general, if the value of the US dollar goes up compared with a foreign currency, an investment traded in that foreign currency will go down in value because it will be worth fewer US dollars. This can have a negative effect on Fund performance. Conversely, when the US dollar weakens in relation to a foreign currency, an investment traded in that foreign currency will increase in value, which can contribute to Fund performance. For the six months ended June 30, 2018, the US dollar rose in value relative to most currencies. As a result, the Fund’s performance was negatively affected by the portfolio’s investment predominantly in securities with non-US currency exposure.

During the past six months, we increased the Fund’s holdings mainly in Mexico as interesting investment opportunities emerged. Key purchases included additional investments in Banco Santander Mexico, one of Mexico’s leading banks, as well as in Naver, a South Korea-based online search and mobile messenger company with users across Asia.

Meanwhile, we conducted some sales in favor of stocks that we considered more attractive within our investment universe. We reduced the Fund’s holdings mainly in China, South Korea and Hong Kong. From a sector perspective, we sold positions in information technology (IT), consumer discretionary and consumer staples.² Key sales included reducing holdings in South Korea-based memory chip maker SK Hynix, Hong Kong-listed gaming company MGM China Holdings, and the aforementioned Tencent Holdings.

Thank you for your participation in Templeton Developing Markets VIP Fund. We look forward to serving your future investment needs.


Top 10 Holdings
6/30/18
*Company* *Sector/Industry, Country*	% of Total Net Assets
Naspers Ltd. Media, South Africa		7.9%
Samsung Electronics Co. Ltd. Technology Hardware, Storage & Peripherals, South Korea		7.8%
Taiwan Semiconductor Manufacturing Co. Ltd. Semiconductors & Semiconductor Equipment, Taiwan		6.5%
Brilliance China Automotive Holdings Ltd. Automobiles, China		5.1%
Alibaba Group Holding Ltd. Internet Software & Services, China		4.9%
Tencent Holdings Ltd. Internet Software & Services, China		3.4%
Unilever PLC Personal Products, U.K.		3.0%
ICICI Bank Ltd. Banks, India		2.3%
LUKOIL PJSC Oil, Gas & Consumable Fuels, Russia		2.1%
Sberbank of Russia PJSC Banks, Russia		1.8%

2. The IT sector comprises electronic equipment, instruments and components; internet software and services; IT services; semiconductors and semiconductor equipment; and technology hardware, storage and peripherals in the SOI. The consumer discretionary sector comprises auto components; automobiles; distributors; hotels, restaurants and leisure; internet and direct marketing retail; media; and textiles, apparel and luxury goods in the SOI. The consumer staples sector comprises beverages, food and staples retailing, food products and personal products in the SOI.


TD-4		Semiannual Report

TEMPLETON DEVELOPING MARKETS VIP FUND

Class 1 Fund Expenses

Actual Fund Expenses

The table below provides information about the actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of ongoing Fund expenses but does not include the effect of ongoing Contract expenses, is used to calculate the “Ending Account Value.” You can estimate the Fund-level expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number under the headings “Actual” and “Fund-Level Expenses Paid During Period” (if Fund-Level Expenses Paid During Period were $ 7.50, then 8.6 × $7.50 = $64.50). In this illustration, the estimated expenses paid this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Actual
(actual return after expenses)

Hypothetical
(5% annual return before expenses)

Share Class

Beginning Account
Value 1/1/18

Ending Account
Value 6/30/18

Fund-Level

Expenses Paid
During Period
1/1/18–6/30/18

^1,2

Ending Account
Value 6/30/18

Fund-Level

Expenses Paid
During Period
1/1/18–6/30/18

^1,2

Net
Annualized
Expense
Ratio

Class 1

$1,000

$923.10

$6.20

$1,018.35

$6.51

1.30%

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above — in the far right column — multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include any ongoing expenses of the Contract for which the Fund is an investment option or acquired fund fees and expenses.


		Semiannual Report			TD-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Templeton Developing Markets VIP Fund


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 1
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$10.31			$7.42			$6.37			$9.27			$10.26			$10.58


Income from investment operations^a:

Net investment income^b		0.05			0.08			0.05			0.06			0.15	^c		0.13

Net realized and unrealized gains (losses)		(0.84	)		2.92			1.08			(1.63	)		(0.97	)		(0.22	)

Total from investment operations		(0.79	)		3.00			1.13			(1.57	)		(0.82	)		(0.09	)


Less distributions from:

Net investment income		(0.11	)		(0.11	)		(0.08	)		(0.20	)		(0.17	)		(0.23	)

Net realized gains		—			—			—			(1.13	)		—			—

Total distributions		(0.11	)		(0.11	)		(0.08	)		(1.33	)		(0.17	)		(0.23	)

Redemption fees		—			—			—			—			—	^d		—	^d

Net asset value, end of period		$9.41			$10.31			$7.42			$6.37			$9.27			$10.26


Total return^e		(7.69)%			40.65%			17.79%			(19.42)%			(8.09)%			(0.73)%

Ratios to average net assets^f

Expenses before waiver and payments by affiliates		1.30%			1.36%			1.38%			1.33%			1.36%			1.35%

Expenses net of waiver and payments by affiliates		1.30%	^g		1.35%	^h		1.36%			1.32%			1.36%	^g		1.35%

Net investment income		0.95%			0.86%			0.79%			0.74%			1.51%	^c		1.25%

Supplemental data

Net assets, end of period (000’s)		$87,782			$105,493			$82,596			$77,000			$114,487			$145,707

Portfolio turnover rate		1.78%			10.76%			26.78%			71.69%			82.87%			44.59%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and

repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.04 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.11%.

^dAmount rounds to less than $0.01 per share.

^fRatios are annualized for periods less than one year.

^gBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^hBenefit of expense reduction rounds to less than 0.01%.


TD-6		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Developing Markets VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 2
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$10.23			$7.36			$6.32			$9.20			$10.19			$10.50


Income from investment operations^a:

Net investment income^b		0.04			0.05			0.04			0.04			0.12	^c		0.10

Net realized and unrealized gains (losses)		(0.84	)		2.91			1.06			(1.61	)		(0.96	)		(0.21	)

Total from investment operations		(0.80	)		2.96			1.10			(1.57	)		(0.84	)		(0.11	)


Less distributions from:

Net investment income		(0.08	)		(0.09	)		(0.06	)		(0.18	)		(0.15	)		(0.20	)



Net realized gains		—			—			—			(1.13	)		—			—

Total distributions		(0.08	)		(0.09	)		(0.06	)		(1.31	)		(0.15	)		(0.20	)

Redemption fees		—			—			—			—			—	^d		—	^d

Net asset value, end of period		$9.35			$10.23			$7.36			$6.32			$9.20			$10.19


Total return^e		(7.81)%			40.41%			17.44%			(19.60)%			(8.39)%			(0.92)%

Ratios to average net assets^f

Expenses before waiver and payments by affiliates		1.55%			1.61%			1.63%			1.58%			1.61%			1.60%

Expenses net of waiver and payments by affiliates		1.55%	^g		1.60%	^h		1.61%			1.57%			1.61%	^g		1.60%

Net investment income		0.70%			0.61%			0.54%			0.49%			1.26%	^c		1.00%

Supplemental data

Net assets, end of period (000’s)		$220,393			$270,433			$205,151			$192,120			$250,813			$274,683

Portfolio turnover rate		1.78%			10.76%			26.78%			71.69%			82.87%			44.59%

^bBased on average daily shares outstanding.

^dAmount rounds to less than $0.01 per share.

^fRatios are annualized for periods less than one year.

^gBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^hBenefit of expense reduction rounds to less than 0.01%.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			TD-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Developing Markets VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 4
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$10.28			$7.39			$6.34			$9.22			$10.20			$10.50


Income from investment operations^a:

Net investment income^b		0.03			0.05			0.03			0.03			0.12	^c		0.10

Net realized and unrealized gains (losses)		(0.84	)		2.92			1.06			(1.62	)		(0.97	)		(0.21	)

Total from investment operations		(0.81	)		2.97			1.09			(1.59	)		(0.85	)		(0.11	)


Less distributions from:

Net investment income		(0.07	)		(0.08	)		(0.04	)		(0.16	)		(0.13	)		(0.19	)

Net realized gains		—			—			—			(1.13	)		—			—

Total distributions		(0.07	)		(0.08	)		(0.04	)		(1.29	)		(0.13	)		(0.19	)

Redemption fees		—			—			—			—			—	^d		—	^d

Net asset value, end of period		$9.40			$10.28			$7.39			$6.34			$9.22			$10.20


Total return^e		(7.87)%			40.30%			17.32%			(19.70)%			(8.48)%			(1.07)%

Ratios to average net assets^f

Expenses before waiver and payments by affiliates		1.65%			1.71%			1.73%			1.68%			1.71%			1.70%

Expenses net of waiver and payments by affiliates		1.65%	^g		1.70%	^h		1.71%			1.67%			1.71%	^g		1.70%

Net investment income		0.60%			0.51%			0.44%			0.39%			1.16%	^c		0.90%

Supplemental data

Net assets, end of period (000’s)		$6,154			$7,199			$6,377			$7,109			$11,106			$15,225

Portfolio turnover rate		1.78%			10.76%			26.78%			71.69%			82.87%			44.59%

^bBased on average daily shares outstanding.

^dAmount rounds to less than $0.01 per share.

^fRatios are annualized for periods less than one year.

^gBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^hBenefit of expense reduction rounds to less than 0.01%.


TD-8		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2018 (unaudited)


Templeton Developing Markets VIP Fund
		Industry		Shares		Value
	Common Stocks 95.1%
	Belgium 0.4%
	Anheuser-Busch InBev SA/NV		Beverages		12,444	$	1,257,619

	Brazil 1.1%
a	B2W Cia Digital		Internet & Direct Marketing Retail		148,600		1,031,558
	B3 SA — Brasil Bolsa Balcao		Capital Markets		55,400		292,365
	M. Dias Branco SA		Food Products		136,200		1,314,533
	Mahle-Metal Leve SA		Auto Components		136,600		917,235

							3,555,691

	Cambodia 1.4%
	NagaCorp Ltd.		Hotels, Restaurants & Leisure		4,780,800		4,344,492

	China 22.8%
a	Alibaba Group Holding Ltd., ADR		Internet Software & Services		82,310		15,270,974
	BAIC Motor Corp. Ltd., H		Automobiles		1,686,100		1,611,735
a	Baidu Inc., ADR		Internet Software & Services		9,411		2,286,873
	Brilliance China Automotive Holdings Ltd.		Automobiles		8,909,300		16,078,879
	China Mobile Ltd.		Wireless Telecommunication Services		490,500		4,357,333
	China Petroleum & Chemical Corp., H		Oil, Gas & Consumable Fuels		4,030,000		3,600,576
	CNOOC Ltd.		Oil, Gas & Consumable Fuels		2,000,500		3,452,281
	COSCO Shipping Ports Ltd.		Transportation Infrastructure		1,091,638		909,924
	Dah Chong Hong Holdings Ltd.		Distributors		1,746,100		870,151
a	Inner Mongolia Yitai Coal Co. Ltd., B		Oil, Gas & Consumable Fuels		441,500		602,206
	NetEase Inc., ADR		Internet Software & Services		8,147		2,058,503
	Ping An Bank Co. Ltd., A		Banks		1,636,500		2,246,758
	Ping An Insurance Group Co. of China Ltd., A		Insurance		446,198		3,947,110
	Poly Culture Group Corp. Ltd., H		Media		229,200		365,152
	Tencent Holdings Ltd.		Internet Software & Services		213,900		10,735,825
	Uni-President China Holdings Ltd.		Food Products		2,099,700		2,697,533
	Weifu High-Technology Co. Ltd., B		Auto Components		334,339		727,820

							71,819,633

	Czech Republic 0.4%
	Moneta Money Bank AS		Banks		390,403		1,339,889

	Hong Kong 1.7%
	Dairy Farm International Holdings Ltd.		Food & Staples Retailing		149,333		1,312,637
	MGM China Holdings Ltd.		Hotels, Restaurants & Leisure		603,200		1,399,206
	Sands China Ltd.		Hotels, Restaurants & Leisure		469,600		2,510,782

							5,222,625

	Hungary 1.0%
	Richter Gedeon Nyrt		Pharmaceuticals		177,170		3,238,997

	India 6.3%
	Bajaj Holdings & Investment Ltd.		Diversified Financial Services		35,390		1,490,040
	Biocon Ltd.		Biotechnology		332,552		3,009,533
	Coal India Ltd.		Oil, Gas & Consumable Fuels		245,918		949,583
	Glenmark Pharmaceuticals Ltd.		Pharmaceuticals		292,323		2,489,613
	ICICI Bank Ltd.		Banks		1,806,409		7,266,799
	Infosys Ltd.		IT Services		119,268		2,277,346
	Tata Chemicals Ltd.		Chemicals		131,000		1,335,354
a	Tata Motors Ltd., A		Automobiles		401,271		929,910

							19,748,178


		Semiannual Report			TD-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)


		Industry		Shares		Value
	Common Stocks (continued)
	Indonesia 2.9%
	Astra International Tbk PT		Automobiles		10,115,100	$	4,658,734
	Bank Danamon Indonesia Tbk PT		Banks		5,707,000		2,538,878
	Perusahaan Gas Negara (Persero) Tbk PT		Gas Utilities		4,738,900		659,742
	Semen Indonesia (Persero) Tbk PT		Construction Materials		2,764,700		1,374,633

							9,231,987

	Kenya 0.3%
	Equity Group Holdings Ltd.		Banks		2,127,994		975,419

	Mexico 2.0%
	Banco Santander Mexico SA Institucion de Banca Multiple Grupo Financiero Santander, ADR		Banks		770,019		5,151,427
	Nemak SAB de CV		Auto Components		1,426,300		980,556

							6,131,983

	Nigeria 0.0%^†
	Nigerian Breweries PLC		Beverages		170,327		53,807

	Pakistan 0.6%
	Habib Bank Ltd.		Banks		1,460,000		1,996,879

	Peru 1.3%
	Compania de Minas Buenaventura SA, ADR		Metals & Mining		299,680		4,084,638

	Philippines 0.2%
	BDO Unibank Inc.		Banks		327,469		770,140

	Russia 8.0%
	Gazprom PJSC, ADR		Oil, Gas & Consumable Fuels		666,900		2,935,027
	LUKOIL PJSC, ADR		Oil, Gas & Consumable Fuels		95,300		6,516,614
a,b	Mail.Ru Group Ltd., GDR, Reg S		Internet Software & Services		127,199		3,688,771
	MMC Norilsk Nickel PJSC, ADR		Metals & Mining		63,900		1,147,005
	Sberbank of Russia PJSC, ADR		Banks		402,166		5,805,266
a	Yandex NV, A		Internet Software & Services		136,818		4,911,766

							25,004,449

	Singapore 0.2%
	DBS Group Holdings Ltd.		Banks		25,706		502,064

	South Africa 8.8%
	Massmart Holdings Ltd.		Food & Staples Retailing		293,714		2,391,047
	MTN Group Ltd.		Wireless Telecommunication Services		80,702		635,078
	Naspers Ltd., N		Media		97,448		24,768,350

							27,794,475

	South Korea 17.2%
	Daelim Industrial Co. Ltd.		Construction & Engineering		32,958		2,260,433
	Fila Korea Ltd.		Textiles, Apparel & Luxury Goods		147,630		4,453,783
	Hankook Tire Co. Ltd.		Auto Components		21,600		815,277
	Hankook Tire Worldwide Co. Ltd.		Diversified Financial Services		37,500		588,354
	Hanon Systems		Auto Components		198,341		1,884,897
	HDC Holdings Co. Ltd.		Construction & Engineering		30,176		773,744
a	HDC Hyundai Development Co-Engineering & Construction		Construction & Engineering		49,151		2,375,147
	Hite Jinro Co. Ltd.		Beverages		64,320		1,133,125
	Interpark Holdings Corp.		Internet & Direct Marketing Retail		142,053		359,781
	KT Skylife Co. Ltd.		Media		176,060		2,162,473
	LG Corp.		Industrial Conglomerates		19,524		1,262,041
	Naver Corp.		Internet Software & Services		6,587		4,505,900
	POSCO		Metals & Mining		13,592		4,009,116


TD-10		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)


		Industry		Shares		Value
	Common Stocks (continued)
	South Korea (continued)
	Samsung Electronics Co. Ltd.		Technology Hardware, Storage & Peripherals		588,200	$	24,600,619
	SK Hynix Inc.		Semiconductors & Semiconductor Equipment		37,980		2,918,133

							54,102,823

	Taiwan 10.6%
	Catcher Technology Co. Ltd.		Technology Hardware, Storage & Peripherals		341,000		3,817,248
	FIT Hon Teng Ltd.		Electronic Equipment, Instruments & Components		1,759,800		796,234
	Hon Hai Precision Industry Co. Ltd.		Electronic Equipment, Instruments & Components		1,906,500		5,207,170
	Largan Precision Co. Ltd.		Electronic Equipment, Instruments & Components		11,900		1,754,021
	Pegatron Corp.		Technology Hardware, Storage & Peripherals		563,800		1,160,471
	Taiwan Semiconductor Manufacturing Co. Ltd.		Semiconductors & Semiconductor Equipment		2,879,000		20,461,673

							33,196,817

	Thailand 3.9%
	Kasikornbank PCL, fgn		Banks		619,500		3,754,546
	Kiatnakin Bank PCL, fgn		Banks		1,009,800		2,073,150
	Land and Houses PCL, fgn		Real Estate Management & Development		4,853,900		1,662,093
	PTT Exploration and Production PCL, fgn		Oil, Gas & Consumable Fuels		241,600		1,028,630
	Siam Commercial Bank PCL, fgn		Banks		306,400		1,100,255
	Thai Beverage PCL, fgn		Beverages		4,816,500		2,545,326

							12,164,000

	United Kingdom 3.0%
	Unilever PLC		Personal Products		167,932		9,296,640

	United States 1.0%
a	IMAX Corp.		Media		135,942		3,011,115


	Total Common Stocks (Cost $216,603,137)						298,844,360


c	Participatory Notes (Cost $1,403,975) 0.5%
	Saudi Arabia 0.5%
	HSBC Bank PLC, Saudi Basic Industries Corp., 1/19/21		Chemicals		51,820		1,743,753

	Preferred Stocks 3.2%
	Brazil 3.2%
d	Banco Bradesco SA, 5.48%, ADR, pfd		Banks		690,596		4,737,489
d	Itau Unibanco Holding SA, 8.866%, ADR, pfd		Banks		517,962		5,376,445


	Total Preferred Stocks (Cost $5,860,355)						10,113,934


	Total Investments before Short Term Investments (Cost $223,867,467)						310,702,047


	Short Term Investments (Cost $1,862,370) 0.6%
	Money Market Funds 0.6%
	United States 0.6%
e,f	Institutional Fiduciary Trust Money Market Portfolio, 1.51%				1,862,370		1,862,370

	Total Investments (Cost $225,729,837) 99.4%						312,564,417

	Other Assets, less Liabilities 0.6%						1,763,651


	Net Assets 100.0%					$	314,328,068


		Semiannual Report			TD-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

See Abbreviations on page TD-22.

^† Rounds to less than 0.1% of net assets.

^a Non-income producing.

^b Security was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2018, the value of this security was $3,688,771, representing 1.2% of net assets.

^c See Note 1(c) regarding Participatory Notes.

^d Variable rate security. The rate shown represents the yield at period end.

^e See Note 3(e) regarding investments in affiliated management investment companies.

^f The rate shown is the annualized seven-day effective yield at period end.


TD-12		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2018 (unaudited)


	Templeton Developing Markets VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	223,867,467
Cost - Non-controlled affiliates (Note 3e)		1,862,370

Value - Unaffiliated issuers	$	310,702,047
Value - Non-controlled affiliates (Note 3e)		1,862,370
Foreign currency, at value (cost $11,190)		11,190
Receivables:
Investment securities sold		1,171,090
Capital shares sold		201,329
Dividends		1,496,452
Foreign tax refund		22,404
Other assets		260

Total assets		315,467,142

Liabilities:
Payables:
Capital shares redeemed		359,983
Management fees		279,336
Distribution fees		101,265
Reports to shareholders		74,072
Deferred tax		249,187
Accrued expenses and other liabilities		75,231

Total liabilities		1,139,074

Net assets, at value	$	314,328,068

Net assets consist of:
Paid-in capital	$	240,937,924
Distributions in excess of net investment income		(20,426	)
Net unrealized appreciation (depreciation)		86,556,822
Accumulated net realized gain (loss)		(13,146,252	)

Net assets, at value	$	314,328,068


Class 1:
Net assets, at value	$	87,781,537

Shares outstanding		9,325,509

Net asset value and maximum offering price per share	$	9.41


Class 2:
Net assets, at value	$	220,392,764

Shares outstanding		23,580,188

Net asset value and maximum offering price per share	$	9.35


Class 4:
Net assets, at value	$	6,153,767

Shares outstanding		654,694

Net asset value and maximum offering price per share	$	9.40


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			TD-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2018 (unaudited)


	Templeton Developing Markets VIP Fund
Investment income:
Dividends: (net of foreign taxes)*
Unaffiliated issuers	$	4,054,911
Non-controlled affiliates (Note 3e)		8,814

Total investment income		4,063,725

Expenses:
Management fees (Note 3a)		2,146,662
Distribution fees: (Note 3c)
Class 2		318,312
Class 4		11,951
Custodian fees (Note 4)		64,288
Reports to shareholders		78,967
Professional fees		39,502
Trustees’ fees and expenses		875
Other		14,361

Total expenses		2,674,918
Expenses waived/paid by affiliates (Note 3e)		(2,904	)

Net expenses		2,672,014

Net investment income		1,391,711

Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		14,951,646
Foreign currency transactions		(50,073	)

Net realized gain (loss)		14,901,573

Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(44,021,324	)
Translation of other assets and liabilities denominated in foreign currencies		(15,117	)
Change in deferred taxes on unrealized appreciation		412,851

Net change in unrealized appreciation (depreciation)		(43,623,590	)

Net realized and unrealized gain (loss)		(28,722,017	)

Net increase (decrease) in net assets resulting from operations	$	(27,330,306	)

*Foreign taxes withheld on dividends	$	635,816


TD-14		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets


	Templeton Developing Markets VIP Fund
	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	1,391,711		$	2,374,437
Net realized gain (loss)		14,901,573			15,871,903
Net change in unrealized appreciation (depreciation)		(43,623,590	)		97,762,101

Net increase (decrease) in net assets resulting from operations		(27,330,306	)		116,008,441

Distributions to shareholders from:
Net investment income:
Class 1		(1,013,838	)		(1,158,124	)
Class 2		(1,947,210	)		(2,409,152	)
Class 4		(46,243	)		(56,318	)

Total distributions to shareholders		(3,007,291	)		(3,623,594	)

Capital share transactions: (Note 2)
Class 1		(9,191,054	)		(8,439,257	)
Class 2		(28,786,843	)		(13,542,309	)
Class 4		(481,542	)		(1,401,998	)

Total capital share transactions		(38,459,439	)		(23,383,564	)

Net increase (decrease) in net assets		(68,797,036	)		89,001,283
Net assets:
Beginning of period		383,125,104			294,123,821

End of period	$	314,328,068		$	383,125,104

Undistributed net investment income included in net assets:
End of period	$	—		$	1,595,154

Distributions in excess of net investment income included in net assets:
End of period	$	(20,426	)	$	—


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			TD-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Templeton Developing Markets VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eighteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Templeton Developing Markets VIP Fund (Fund) is included in this report. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers three classes of shares: Class 1, Class 2 and Class 4. Each class of shares may differ by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Investments in open-end mutual funds are valued at the closing NAV.


TD-16		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

b. Foreign Currency Translation

exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period.

c. Participatory Notes

The Fund invests in Participatory Notes (P-Notes). P-Notes are promissory notes that are designed to offer a return linked to the performance of a particular underlying equity security or market. P-Notes are issued by banks or broker-dealers and allow the Fund to gain exposure to common stocks in certain foreign markets without registering with the market regulator. Income received from P-Notes is recorded as dividend income in the Statement of Operations. P-Notes may contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract. These securities may be more volatile and less liquid than other investments held by the Fund.

d. Income and Deferred Taxes


		Semiannual Report			TD-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

e. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

f. Accounting Estimates

g. Guarantees and Indemnifications

2. Shares of Beneficial Interest

At June 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 1 Shares:
Shares sold		388,890		$	4,044,488			1,136,991		$	10,043,847
Shares issued in reinvestment of distributions		105,170			1,013,838			132,055			1,158,124
Shares redeemed		(1,396,049	)		(14,249,380	)		(2,176,842	)		(19,641,228	)

Net increase (decrease)		(901,989	)	$	(9,191,054	)		(907,796	)	$	(8,439,257	)

Class 2 Shares:
Shares sold		2,492,278		$	25,493,243			6,636,331		$	58,458,562
Shares issued in reinvestment of distributions		203,470			1,947,210			276,596			2,409,152
Shares redeemed		(5,557,181	)		(56,227,296	)		(8,351,598	)		(74,410,023	)

Net increase (decrease)		(2,861,433	)	$	(28,786,843	)		(1,438,671	)	$	(13,542,309	)


TD-18		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount
Class 4 Shares:
Shares sold		37,504		$	374,300			85,028		$	793,112
Shares issued in reinvestment of distributions		4,802			46,243			6,437			56,318
Shares redeemed		(87,994	)		(902,085	)		(253,881	)		(2,251,428	)

Net increase (decrease)		(45,688	)	$	(481,542	)		(162,416	)	$	(1,401,998	)

3. Transactions with Affiliates


Subsidiary		Affiliation
Templeton Asset Management Ltd. (TAML)		Investment manager
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent

a. Management Fees

Effective May 1, 2018, the Fund pays an investment management fee to TAML based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
1.050%		Up to and including $1 billion
1.000%		Over $1 billion, up to and including $5 billion
0.950%		Over $5 billion, up to and including $10 billion
0.900%		Over $10 billion, up to and including $15 billion
0.850%		Over $15 billion, up to and including $20 billion
0.800%		In excess of $20 billion

Prior to May 1, 2018, the Fund paid fees to TAML based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
1.250%		Up to and including $200 million
1.235%		Over $200 million, up to and including $700 million
1.200%		Over $700 million, up to and including $1 billion
1.150%		Over $1 billion, up to and including $1.2 billion
1.125%		Over $1.2 billion, up to and including $5 billion
1.075%		Over $5 billion, up to and including $10 billion
1.025%		Over $10 billion, up to and including $15 billion
0.975%		Over $15 billion, up to and including $20 billion
0.925%		In excess of $20 billion

For the period ended June 30, 2018, the annualized gross effective investment management fee rate was 1.186% of the Fund’s average daily net assets.


		Semiannual Report			TD-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

3. Transactions with Affiliates (continued)

b. Administrative Fees

Under an agreement with TAML, FT Services provides administrative services to the Fund. The fee is paid by TAML based on the Fund’s average daily net assets, and is not an additional expense of the Fund.

c. Distribution Fees

The Board has adopted distribution plans for Class 2 and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.25% and 0.35% per year of its average daily net assets of Class 2 and Class 4 respectively. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

Investor Services, under terms of an agreement, performs shareholder servicing for the Fund and is not paid by the Fund for the services.

e. Investments in Affiliated Management Investment Companies

The Fund invests in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the affiliated management investment companies, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. Prior to January 1, 2014, the waiver was accounted for as a reduction to management fees. During the period ended June 30, 2018, the Fund held investments in affiliated management investment companies as follows:


	Number of Shares Held at Beginning of Period		Gross Additions		Gross Reductions			Number of Shares Held at End of Period		Value at End of Period		Dividend Income		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 1.51%		1,128,203		21,905,607		(21,171,440	)		1,862,370	$	1,862,370	$	8,814	$	—	$	—

4. Expense Offset Arrangement

5. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains, if any. At December 31, 2017, the capital loss carryforwards were as follows:


Capital loss carryforwards not subject to expiration:
Short Term			$17,661,798
Long Term			7,528,497

Total capital loss carryforwards			$25,190,295


TD-20		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

At June 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


Cost of investments	$230,611,976

Unrealized appreciation	$99,880,240
Unrealized depreciation	(17,927,799	)

Net unrealized appreciation (depreciation)	$81,952,441

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of corporate actions.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2018, aggregated $6,428,581 and $49,027,914, respectively.

7. Concentration of Risk

The United States and other nations have imposed and could impose additional sanctions on certain issuers in Russia due to regional conflicts. These sanctions could result in the devaluation of Russia’s currency, a downgrade in Russian issuers’ credit ratings, or a decline in the value and liquidity of Russian stocks or other securities. Such sanctions could also adversely affect Russia’s economy, possibly forcing the economy into a recession. The Fund may be prohibited from investing in securities issued by companies subject to such sanctions. In addition, if the Fund holds the securities of an issuer that is subject to such sanctions, an immediate freeze of that issuer’s securities could result, impairing the ability of the Fund to buy, sell, receive or deliver those securities. There is also the risk that countermeasures could be taken by Russia’s government, which could involve the seizure of the Fund’s assets. These risks could affect the value of the Fund’s portfolio. While the Fund holds securities of certain issuers impacted by the sanctions, existing investments do not presently violate the applicable terms and conditions of the sanctions. The sanctions currently do not affect the Fund’s ability to sell these securities. At June 30, 2018, the Fund had 8.0% of its net assets invested in Russia.

8. Credit Facility


		Semiannual Report			TD-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

9. Fair Value Measurements

•

Level 1 – quoted prices in active markets for identical financial instruments

•

Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

•

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2018, in valuing the Fund’s assets carried at fair value, is as follows:


	Level 1		Level 2		Level 3		Total

Assets:
Investments in Securities:^a
Equity Investments^b	$	308,958,294	$	—	$	—	$	308,958,294
Participatory Notes		—		1,743,753		—		1,743,753
Short Term Investments		1,862,370		—		—		1,862,370

Total Investments in Securities	$	310,820,664	$	1,743,753	$	—	$	312,564,417

^aFor detailed categories, see the accompanying Statement of Investments.

^bIncludes common and preferred stocks.

10. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations


Selected Portfolio

ADR		American Depositary Receipt

GDR		Global Depositary Receipt

HDC		Housing Development Corp.


TD-22		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Tax Information (unaudited)

Templeton Developing Markets VIP Fund

At December 31, 2017, more than 50% of the Fund’s total assets were invested in securities of foreign issuers. In most instances, foreign taxes were withheld from income paid to the Fund on these investments. As shown in the table below, the Fund hereby reports to shareholders the foreign source income and foreign taxes paid, pursuant to Section 853 of the Internal Revenue Code. This written statement will allow shareholders of record on June 14, 2018, to treat their proportionate share of foreign taxes paid by the Fund as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.

The following table provides a detailed analysis of foreign tax paid, and foreign source income as reported by the Fund, to Class 1, Class 2, and Class 4 shareholders of record.


Class	Foreign Tax Paid Per Share	Foreign Source Income Per Share
Class 1	$0.0330	$0.1410
Class 2	$0.0330	$0.1150
Class 4	$0.0330	$0.1042

Foreign Source Income Per Share (Column 2) is the amount per share of income dividends attributable to foreign securities held by the Fund, plus any foreign taxes withheld on these dividends.


		Semiannual Report			TD-23

This page intentionally left blank.

Templeton Foreign VIP Fund

This semiannual report for Templeton Foreign VIP Fund covers the period ended June 30, 2018.

Class 1 Performance Summary as of June 30, 2018

The Fund’s Class 1 Shares had a -3.81% total return* for the six-month period ended June 30, 2018.


		Semiannual Report			TF-1

TEMPLETON FOREIGN VIP FUND

Fund Goal and Main Investments

The Fund seeks long-term capital growth. Under normal market conditions, the Fund invests at least 80% of its net assets in investments of issuers located outside the US, including those in emerging markets.

Fund Risks

All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors. Currency rates may fluctuate significantly over short periods of time, and can reduce returns. Because the Fund may invest its assets in companies in a specific region, including Europe, it is subject to greater risks of adverse developments in that region and/or the surrounding regions than a fund that is more broadly diversified geographically. Current political and financial uncertainty surrounding the European Union may increase market volatility and the economic risk of investing in companies in Europe. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Fund’s benchmark, the MSCI All Country World Index (ACWI) ex USA Index, had a –3.44% total return for the same period.¹ Please note, index performance information is provided for reference and we do not attempt to track the index but rather undertake investments on the basis of fundamental research.

Economic and Market Overview

Geographic Composition

Based on Total Net Assets as of 6/30/18

LOGO

investor optimism about global economic growth. However, global stocks had a –0.13% total return for the six-month period, as measured by the MSCI ACWI, largely due to an overall decline in emerging market stocks.¹

The US economy continued to grow during the six months under review. After moderating for three consecutive quarters, the economy grew faster in 2018’s second quarter, driven by consumer spending, exports, business investment and government spending. The unemployment rate declined from 4.1% in December 2017, as reported at the beginning of the six-month period, to 4.0% at period-end.³ Annual inflation, as measured by the Consumer Price Index, increased from 2.1% in December 2017, as reported at the beginning of the period, to

1. Source: Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

2. Please see Index Descriptions following the Fund Summaries.

3. Source: US Bureau of Labor Statistics.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).


TF-2		Semiannual Report

TEMPLETON FOREIGN VIP FUND

2.9% at period-end.³ The US Federal Reserve raised its target range for the federal funds rate in March and June 2018 and continued reducing its balance sheet as part of its ongoing plan to normalize monetary policy.

Investment Strategy

Our investment philosophy is bottom up, value oriented and long term. When choosing investments for the Fund, we generally focus on the market price of a company’s securities relative to our evaluation of the company’s potential long-term earnings, asset value and cash flow. We also consider a company’s price/earnings ratio, profit margins and liquidation value.


Top 10 Holdings
6/30/18
Company *Sector/Industry, Country*	% of Total Net Assets
Samsung Electronics Co. Ltd. Technology Hardware, Storage & Peripherals, South Korea		3.6%
BP PLC Oil, Gas & Consumable Fuels, U.K.		3.3%
Royal Dutch Shell PLC Oil, Gas & Consumable Fuels, U.K.		3.0%
Teva Pharmaceutical Industries Ltd. Pharmaceuticals, Israel		2.5%
Wheaton Precious Metals Corp. Metals & Mining, Canada		2.4%
Standard Chartered PLC Banks, U.K.		2.3%
Baidu Inc. Internet Software & Services, China		2.2%
SoftBank Group Corp. Wireless Telecommunication Services, Japan		2.2%
Roche Holding AG Pharmaceuticals, Switzerland		2.1%
BNP Paribas SA Banks, France		2.0%

Manager’s Discussion

During the six months under review, an overweighted allocation and stock selection in the health care sector, especially in pharmaceuticals, contributed significantly to the Fund’s performance relative to its benchmark, the MSCI ACWI ex USA Index.⁴ Notably, our positions in pharmaceutical firms Teva Pharmaceutical Industries (Israel) and Astellas Pharma (Japan), as well as in life sciences tools and services companies MorphoSys⁵ (Germany) and QIAGEN (the Netherlands), helped the Fund’s performance. Teva’s shares rose following a major vote of confidence from Warren Buffett’s Berkshire Hathaway (not a Fund holding), which initiated a stake in Teva during 2018’s first quarter. The stock found additional support from better-than-expected first quarter results and an upwardly revised full-year guidance. Further boosting its share price was the company’s price reduction of its flagship multiple sclerosis drug Copaxone^® in an effort to compete with emerging generic-drug competitors.

An overweighted allocation and stock selection in the energy sector, especially in oil, gas and consumable fuels, supported

4. The health care sector comprises biotechnology, health care equipment and supplies, health care providers and services, life sciences tools and services, and pharmaceuticals in the SOI.

5. Not part of the index.


		Semiannual Report			TF-3

TEMPLETON FOREIGN VIP FUND

relative performance.⁶ Notably, our positions in oil and gas companies BP (UK), Royal Dutch Shell (UK) and Eni (Italy) aided the Fund’s performance. Shares of BP were supported by rising crude oil prices and solid quarterly results released in May. BP’s results reflected strong cost control and very strong operational and project delivery performance, resulting in increased oil and gas production and further improvements to its balance sheet. BP also stated the company’s board will discuss a dividend hike later in 2018.

Stock selection in the consumer staples sector, especially in beverages, also supported relative performance.⁷

Other key individual contributors included media firm SES (Luxembourg), chemicals company Johnson Matthey (UK) and internet services company Baidu (China).

In contrast, stock selection in the financials sector detracted from relative results, especially banks, notably our positions in South Korean banks KB Financial Group⁵ and Hana Financial Group and UK bank Standard Chartered (UK).⁸ Shares of KB Financial and Hana Financial declined amid general concerns about regulatory and geopolitical risks in South Korea.

Our positioning in the information technology (IT) sector, especially an overweighting in technology hardware, storage and peripherals, hampered relative results.⁹ Our investments in multinational electronics company Samsung Electronics (South Korea), online game publisher NetEase (China) and computer manufacturer Quanta Computer (Taiwan) weighed on relative performance. NetEase’s shares declined due to weaker-than-expected fourth-quarter 2017 results and mixed first-quarter 2018 results.

Stock selection in the materials sector also weighed on relative performance, particularly our investments in cement company Taiheiyo Cement (Japan) and metals and mining company Sumitomo Metal Mining (Japan).¹⁰

Key individual detractors included professional services firm Capita (UK),¹¹ auto component company Hyundai Mobis (South Korea)¹¹ and health care equipment and supplies firm Getinge (Sweden).

From a geographic perspective, an overweighted allocation and stock selection in Israel contributed to the Fund’s relative performance. Stock selection and an overweighting in Europe, mainly our positioning in Germany and Italy, also aided relative results. In contrast, stock selection in Asia detracted from relative performance, especially holdings in South Korea, Japan, Hong Kong and Taiwan. An overweighting in North America, particularly in Canada, weighed on relative results.

It is important to recognize the effect of currency movements on the Fund’s performance. In general, if the value of the US dollar goes up compared with a foreign currency, an investment traded in that foreign currency will go down in value because it will be worth fewer US dollars. This can have a negative effect on Fund performance. Conversely, when the US dollar weakens in relation to a foreign currency, an investment traded in that foreign currency will increase in value, which can contribute to Fund performance. For the six months ended June 30, 2018, the US dollar rose in value relative to most currencies. As a result, the Fund’s performance was negatively affected by the portfolio’s investment predominantly in securities with non-US currency exposure.

Thank you for your participation in Templeton Foreign VIP Fund. We look forward to serving your future investment needs.

6. The energy sector comprises energy equipment and services and oil, gas and consumable fuels in the SOI.

7. The consumer staples sector comprises beverages, food and staples retailing and food products in the SOI.

8. The financials sector comprises banks, capital markets and insurance in the SOI.

9. The IT sector comprises electronic equipment, instruments and components; internet software and services; semiconductors and semiconductor equipment; and technology hardware, storage and peripherals in the SOI.

10. The materials sector comprises chemicals, construction materials, and metals and mining in the SOI.

11. Not held at period-end.


TF-4		Semiannual Report

TEMPLETON FOREIGN VIP FUND

Class 1 Fund Expenses

Actual Fund Expenses

The table below provides information about the actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of ongoing Fund expenses but does not include the effect of ongoing Contract expenses, is used to calculate the “Ending Account Value.” You can estimate the Fund-level expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number under the headings “Actual” and “Fund-Level Expenses Paid During Period” (if Fund-Level Expenses Paid During Period were $ 7.50, then 8.6 × $7.50 = $64.50). In this illustration, the estimated expenses paid this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Actual
(actual return after expenses)

Hypothetical
(5% annual return before expenses)

Share Class

Beginning Account
Value 1/1/18

Ending Account
Value 6/30/18

Fund-Level
Expenses Paid
During Period
1/1/18–6/30/18

^1,2

Ending Account
Value 6/30/18

Fund-Level
Expenses Paid
During Period
1/1/18–6/30/18

^1,2

Net
Annualized
Expense
Ratio

Class 1

$1,000

$961.90

$3.94

$1,020.78

$4.06

0.81%

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above — in the far right column — multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include any ongoing expenses of the Contract for which the Fund is an investment option or acquired fund fees and expenses.


		Semiannual Report			TF-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Templeton Foreign VIP Fund


	Six Months Ended June 30, 2018			Year Ended December 31,
	(unaudited)			2017			2016			2015			2014			2013
Class 1
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$15.80			$13.89			$13.46			$15.34			$17.56			$14.63


Income from investment operations^a:

Net investment income^b		0.20			0.30			0.33			0.31			0.53	^c		0.34

Net realized and unrealized gains (losses)		(0.79	)		2.03			0.62			(1.16	)		(2.39	)		3.00

Total from investment operations		(0.59	)		2.33			0.95			(0.85	)		(1.86	)		3.34


Less distributions from:

Net investment income		(0.44	)		(0.42	)		(0.29	)		(0.53	)		(0.36	)		(0.41	)

Net realized gains		—			—			(0.23	)		(0.50	)		—			—

Total distributions		(0.44	)		(0.42	)		(0.52	)		(1.03	)		(0.36	)		(0.41	)

Redemption fees		—			—			—			—			—	^d		—	^d

Net asset value, end of period		$14.77			$15.80			$13.89			$13.46			$15.34			$17.56


Total return^e		(3.81)%			17.02%			7.49%			(6.31)%			(10.89)%			23.27%

Ratios to average net assets^f

Expenses before waiver and payments by affiliates		0.82%			0.82%			0.80%			0.78%			0.77%			0.78%

Expenses net of waiver and payments by affiliates		0.81%			0.81%	^g		0.78%			0.78%	^h		0.77%	^h		0.78%

Net investment income		2.60%			1.99%			2.38%			2.05%			3.11%	^c		2.16%

Supplemental data

Net assets, end of period (000’s)		$137,696			$152,684			$133,218			$214,172			$248,355			$298,468

Portfolio turnover rate		11.87%			26.81%			20.93%			15.15%			25.71%			23.61%

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.16 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.13%.

^dAmount rounds to less than $0.01 per share.

fRatios are annualized for periods less than one year.

^gBenefit of expense reduction rounds to less than 0.01%.

^hBenefit of waiver and payments by affiliates rounds to less than 0.01%.


TF-6		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Foreign VIP Fund (continued)


	Six Months Ended June 30, 2018			Year Ended December 31,
	(unaudited)			2017			2016			2015			2014			2013
Class 2
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$15.47			$13.61			$13.20			$15.05			$17.24			$14.37


Income from investment operations^a:

Net investment income^b		0.18			0.26			0.28			0.27			0.48	^c		0.30

Net realized and unrealized gains (losses)		(0.77	)		1.98			0.62			(1.13	)		(2.35	)		2.94

Total from investment operations		(0.59	)		2.24			0.90			(0.86	)		(1.87	)		3.24


Less distributions from:

Net investment income		(0.40	)		(0.38	)		(0.26	)		(0.49	)		(0.32	)		(0.37	)

Net realized gains		—			—			(0.23	)		(0.50	)		—			—

Total distributions		(0.40	)		(0.38	)		(0.49	)		(0.99	)		(0.32	)		(0.37	)

Redemption fees		—			—			—			—			—d			—	^d

Net asset value, end of period		$14.48			$15.47			$13.61			$13.20			$15.05			$17.24


Total return^e		(3.89)%			16.69%			7.18%			(6.49)%			(11.13)%			22.97%

Ratios to average net assets^f

Expenses before waiver and payments by affiliates		1.07%			1.07%			1.05%			1.03%			1.02%			1.03%

Expenses net of waiver and payments by affiliates		1.06%			1.06%	^g		1.03%			1.03%	^h		1.02%	^h		1.03%

Net investment income		2.35%			1.74%			2.13%			1.80%			2.86%	^c		1.91%

Supplemental data

Net assets, end of period (000’s)		$1,245,991			$1,394,475			$1,436,518			$1,456,854			$1,645,571			$1,873,586

Portfolio turnover rate		11.87%			26.81%			20.93%			15.15%			25.71%			23.61%

^bBased on average daily shares outstanding.

^dAmount rounds to less than $0.01 per share.

^fRatios are annualized for periods less than one year.

^gBenefit of expense reduction rounds to less than 0.01%.

^hBenefit of waiver and payments by affiliates rounds to less than 0.01%.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			TF-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Foreign VIP Fund (continued)


	Six Months Ended June 30, 2018			Year Ended December 31,
	(unaudited)			2017			2016			2015			2014			2013
Class 4
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$15.71			$13.71			$13.29			$15.16			$17.37			$14.48


Income from investment operations^a:

Net investment income^b		0.17			0.23			0.26			0.25			0.46	^c		0.28

Net realized and unrealized gains (losses)		(0.78	)		2.03			0.63			(1.14	)		(2.36	)		2.97

Total from investment operations		(0.61	)		2.26			0.89			(0.89	)		(1.90	)		3.25


Less distributions from:

Net investment income		(0.36	)		(0.26	)		(0.24	)		(0.48	)		(0.31	)		(0.36	)

Net realized gains		—			—			(0.23	)		(0.50	)		—			—

Total distributions		(0.36	)		(0.26	)		(0.47	)		(0.98	)		(0.31	)		(0.36	)

Redemption fees		—			—			—			—			—	^d		—	^d

Net asset value, end of period		$14.74			$15.71			$13.71			$13.29			$15.16			$17.37


Total return^e		(3.94)%			16.62%			7.09%			(6.65)%			(11.22)%			22.86%

Ratios to average net assets^f

Expenses before waiver and payments by affiliates		1.17%			1.17%			1.15%			1.13%			1.12%			1.13%

Expenses net of waiver and payments by affiliates		1.16%			1.16%	^g		1.13%			1.13%	^h		1.12%	^h		1.13%

Net investment income		2.25%			1.64%			2.03%			1.70%			2.76%	^c		1.81%

Supplemental data

Net assets, end of period (000’s)		$149,188			$159,944			$484,763			$472,189			$503,143			$513,098

Portfolio turnover rate		11.87%			26.81%			20.93%			15.15%			25.71%			23.61%

^bBased on average daily shares outstanding.

^dAmount rounds to less than $0.01 per share.

^fRatios are annualized for periods less than one year.

^gBenefit of expense reduction rounds to less than 0.01%.

^hBenefit of waiver and payments by affiliates rounds to less than 0.01%.


TF-8		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2018 (unaudited)


Templeton Foreign VIP Fund
		Country		Shares		Value
	Common Stocks 98.1%
	Aerospace & Defense 2.6%
	BAE Systems PLC		United Kingdom		1,854,352	$	15,839,208
a	Cobham PLC		United Kingdom		5,307,199		9,016,675
	Rolls-Royce Holdings PLC		United Kingdom		1,153,600		15,054,675

							39,910,558

	Auto Components 1.3%
	Cie Generale des Etablissements Michelin SCA		France		67,168		8,185,019
	Sumitomo Rubber Industries Ltd.		Japan		712,200		11,323,655

							19,508,674

	Automobiles 0.5%
	Hero Motocorp Ltd.		India		154,059		7,816,593

	Banks 14.2%
	Bangkok Bank PCL, fgn		Thailand		3,144,600		18,915,245
	Bank of Ireland Group PLC		Ireland		2,346,131		18,324,268
	Barclays PLC		United Kingdom		8,453,430		21,099,202
	BNP Paribas SA		France		497,898		30,941,641
	Hana Financial Group Inc.		South Korea		494,927		19,013,468
	HSBC Holdings PLC		United Kingdom		3,012,800		28,261,619
	ING Groep NV		Netherlands		1,052,890		15,165,216
	Kasikornbank PCL, fgn		Thailand		249,500		1,512,121
	Kasikornbank PCL, NVDR		Thailand		1,610,500		9,467,788
	KB Financial Group Inc., ADR		South Korea		437,706		20,344,575
	Standard Chartered PLC		United Kingdom		3,816,307		34,905,757

							217,950,900

	Beverages 2.2%
	Kirin Holdings Co. Ltd.		Japan		709,500		18,991,359
	Suntory Beverage & Food Ltd.		Japan		363,800		15,545,183

							34,536,542

	Biotechnology 1.2%
	Shire PLC		United Kingdom		318,110		17,917,096

	Capital Markets 1.3%
	UBS Group AG		Switzerland		1,326,231		20,521,496

	Chemicals 1.5%
	Johnson Matthey PLC		United Kingdom		494,842		23,649,742

	Construction & Engineering 1.2%
	Sinopec Engineering Group Co. Ltd.		China		17,492,000		18,281,097

	Construction Materials 1.6%
	CRH PLC		Ireland		294,271		10,434,680
	Taiheiyo Cement Corp.		Japan		452,700		14,906,649

							25,341,329

	Diversified Telecommunication Services 3.7%
	China Telecom Corp. Ltd., H		China		50,418,357		23,583,251
	Singapore Telecommunications Ltd.		Singapore		8,548,100		19,324,121
	Telefonica Deutschland Holding AG		Germany		3,443,999		13,584,336

							56,491,708

	Electrical Equipment 0.7%
	Vestas Wind Systems AS		Denmark		169,868		10,522,019

	Electronic Equipment, Instruments & Components 0.4%
a	Landis+Gyr Group AG		Switzerland		78,096		5,436,914


		Semiannual Report			TF-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)


		Country		Shares		Value
	Common Stocks (continued)
	Energy Equipment & Services 0.7%
b	SBM Offshore NV		Netherlands		683,691	$	10,643,882

	Food & Staples Retailing 0.8%
	Seven & i Holdings Co. Ltd.		Japan		292,000		12,743,593

	Food Products 0.6%
	Ezaki Glico Co. Ltd.		Japan		177,800		8,545,065

	Health Care Equipment & Supplies 0.8%
	Getinge AB, B		Sweden		651,040		5,927,074
	Shandong Weigao Group Medical Polymer Co. Ltd., H		China		9,924,000		7,019,864

							12,946,938

	Health Care Providers & Services 1.8%
	Shanghai Pharmaceuticals Holding Co. Ltd., H		China		5,083,800		14,027,985
	Sinopharm Group Co. Ltd., H		China		3,443,200		13,845,560

							27,873,545

	Household Durables 0.6%
	Panasonic Corp.		Japan		634,900		8,566,088

	Industrial Conglomerates 2.4%
	CK Hutchison Holdings Ltd.		Hong Kong		2,021,500		21,436,111
	Siemens AG		Germany		122,182		16,162,307

							37,598,418

	Insurance 4.9%
	Aegon NV		Netherlands		3,130,143		18,782,879
	Aviva PLC		United Kingdom		1,743,972		11,607,570
	AXA SA		France		722,428		17,737,685
	China Life Insurance Co. Ltd., H		China		4,639,000		11,972,872
	Chubb Ltd.		United States		113,369		14,400,130

							74,501,136

	Internet Software & Services 3.0%
a	Baidu Inc., ADR		China		138,230		33,589,890
	NetEase Inc., ADR		China		48,100		12,153,427

							45,743,317

	Life Sciences Tools & Services 2.3%
a	MorphoSys AG		Germany		156,612		19,212,651
a	QIAGEN NV		Netherlands		432,810		15,777,015

							34,989,666

	Marine 0.4%
	A.P. Moeller-Maersk AS, B		Denmark		5,208		6,491,114

	Media 1.6%
	SES SA, IDR		Luxembourg		1,315,990		24,123,954

	Metals & Mining 5.2%
	Alamos Gold Inc., A		Canada		3,063,752		17,432,749
	Barrick Gold Corp.		Canada		843,220		11,071,479
	Sumitomo Metal Mining Co. Ltd.		Japan		370,600		14,188,561
	Wheaton Precious Metals Corp.		Canada		1,647,300		36,375,472

							79,068,261


TF-10		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)


	Country		Shares		Value
Common Stocks (continued)
Multi-Utilities 2.6%
E.ON SE		Germany		1,516,092	$	16,214,719
Orsted AS		Denmark		144,200		8,728,567
Veolia Environnement SA		France		671,188		14,374,066

					39,317,352

Oil, Gas & Consumable Fuels 12.1%
BP PLC		United Kingdom		6,554,082		50,053,717
Cenovus Energy Inc.		Canada		1,082,702		11,245,535
Eni SpA		Italy		1,507,144		28,008,425
Husky Energy Inc.		Canada		880,500		13,728,082
INPEX Corp.		Japan		938,800		9,748,865
Kunlun Energy Co. Ltd.		China		7,166,000		6,274,548
Royal Dutch Shell PLC, A		United Kingdom		16,803		583,376
Royal Dutch Shell PLC, B		United Kingdom		1,253,971		44,935,398
Total SA		France		332,436		20,278,448

					184,856,394

Pharmaceuticals 11.4%
Astellas Pharma Inc.		Japan		1,689,500		25,778,630
Bayer AG		Germany		215,217		23,724,193
Merck KGaA		Germany		151,830		14,833,400
Novartis AG		Switzerland		128,920		9,799,170
Roche Holding AG		Switzerland		143,560		31,969,061
Sanofi		France		370,668		29,730,253
Teva Pharmaceutical Industries Ltd., ADR		Israel		1,610,544		39,168,430

					175,003,137

Real Estate Management & Development 0.4%
Mitsui Fudosan Co. Ltd.		Japan		257,800		6,227,537

Semiconductors & Semiconductor Equipment 2.2%
Infineon Technologies AG		Germany		590,665		15,064,958
Taiwan Semiconductor Manufacturing Co. Ltd.		Taiwan		2,587,000		18,386,367

					33,451,325

Specialty Retail 1.4%
Kingfisher PLC		United Kingdom		5,347,092		20,972,267

Technology Hardware, Storage & Peripherals 4.9%
Catcher Technology Co. Ltd.		Taiwan		925,000		10,354,704
Quanta Computer Inc.		Taiwan		5,640,000		9,905,456
Samsung Electronics Co. Ltd.		South Korea		1,311,300		54,843,236

					75,103,396

Trading Companies & Distributors 1.7%
SIG PLC		United Kingdom		5,760,800		10,627,974
Travis Perkins PLC		United Kingdom		856,731		16,094,149

					26,722,123

Wireless Telecommunication Services 3.9%
China Mobile Ltd.		China		1,821,000		16,176,764
SoftBank Group Corp.		Japan		464,700		33,470,826
Vodafone Group PLC, ADR.		United Kingdom		434,503		10,562,768

					60,210,358

Total Common Stocks (Cost $1,258,614,513)					1,503,583,534


		Semiannual Report			TF-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

Country

Shares

Value

Preferred Stocks (Cost $114,062) 0.0%^†

Aerospace & Defense 0.0%^†

Rolls-Royce Holdings PLC, pfd

United Kingdom

81,905,600

108,164

Total Investments before Short Term Investments
(Cost $1,258,728,575)

1,503,691,698

Short Term Investments 1.8%

Money Market Funds (Cost $23,027,774) 1.5%

c,d

Institutional Fiduciary Trust Money Market Portfolio, 1.51%

United States

23,027,774

Investments from Cash Collateral Received for Loaned Securities (Cost
$5,325,483) 0.3%

Money Market Funds 0.3%

c,d

Institutional Fiduciary Trust Money Market Portfolio, 1.51%

United States

5,325,483

Total Investments (Cost $1,287,081,832) 99.9%

1,532,044,955

Other Assets, less Liabilities 0.1%

829,061

Net Assets 100.0%

1,532,874,016

See Abbreviations on page TF-22.

^†Rounds to less than 0.1% of net assets.

^aNon-income producing.

^bA portion or all of the security is on loan at June 30, 2018. See Note 1(c).

^cSee Note 3(e) regarding investments in affiliated management investment companies.

^dThe rate shown is the annualized seven-day effective yield at period end.

^eSee Note 1(c) regarding securities on loan.


TF-12		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2018 (unaudited)


	Templeton Foreign VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	1,258,728,575
Cost - Non-controlled affiliates (Note 3e)		28,353,257

Value - Unaffiliated issuers ⁺	$	1,503,691,698
Value - Non-controlled affiliates (Note 3e)		28,353,257
Cash		79,000
Receivables:
Capital shares sold		188,347
Dividends		8,316,903
European Union tax reclaims		172,319
Other assets		1,125

Total assets		1,540,802,649

Liabilities:
Payables:
Capital shares redeemed		597,149
Management fees		996,323
Distribution fees		636,569
Payable upon return of securities loaned		5,325,483
Accrued expenses and other liabilities		373,109

Total liabilities		7,928,633

Net assets, at value	$	1,532,874,016

Net assets consist of:
Paid-in capital	$	1,320,640,556
Undistributed net investment income		13,698,228
Net unrealized appreciation (depreciation)		244,956,799
Accumulated net realized gain (loss)		(46,421,567	)

Net assets, at value	$	1,532,874,016


Class 1:
Net assets, at value	$	137,695,650

Shares outstanding		9,324,159

Net asset value and maximum offering price per share	$	14.77


Class 2:
Net assets, at value	$	1,245,990,550

Shares outstanding		86,057,168

Net asset value and maximum offering price per share	$	14.48


Class 4:
Net assets, at value	$	149,187,816

Shares outstanding		10,123,298

Net asset value and maximum offering price per share	$	14.74

⁺Includes securities loaned	$	4,631,761


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			TF-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2018 (unaudited)


	Templeton Foreign VIP Fund
Investment income:
Dividends: (net of foreign taxes)*
Unaffiliated issuers	$	27,495,791
Non-controlled affiliates (Note 3e)		285,796
Interest:
Unaffiliated issuers		384
Income from securities loaned (net of fees and rebates)		111,397

Total investment income		27,893,368

Expenses:
Management fees (Note 3a)		6,369,713
Distribution fees: (Note 3c)
Class 2		1,669,480
Class 4		268,662
Custodian fees (Note 4)		98,375
Reports to shareholders		154,405
Professional fees		66,552
Trustees’ fees and expenses		4,503
Other		24,729

Total expenses		8,656,419
Expenses waived/paid by affiliates (Note 3e)		(122,872	)

Net expenses		8,533,547

Net investment income		19,359,821

Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		39,869,704
Foreign currency transactions		(451,514	)

Net realized gain (loss)		39,418,190

Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(122,171,877	)
Translation of other assets and liabilities denominated in foreign currencies		(197,371	)

Net change in unrealized appreciation (depreciation)		(122,369,248	)

Net realized and unrealized gain (loss)		(82,951,058	)

Net increase (decrease) in net assets resulting from operations	$	(63,591,237	)

*Foreign taxes withheld on dividends	$	2,789,020


TF-14		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets


	Templeton Foreign VIP Fund
	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	19,359,821		$	31,019,303
Net realized gain (loss)		39,418,190			(10,184,192	)
Net change in unrealized appreciation (depreciation)		(122,369,248	)		263,520,898

Net increase (decrease) in net assets resulting from operations		(63,591,237	)		284,356,009

Distributions to shareholders from:
Net investment income:
Class 1		(3,961,619	)		(3,928,195	)
Class 2		(33,465,356	)		(35,708,156	)
Class 4		(3,521,973	)		(2,623,801	)

Total distributions to shareholders		(40,948,948	)		(42,260,152	)

Capital share transactions: (Note 2)
Class 1		(5,708,269	)		1,154,617
Class 2		(62,897,290	)		(225,298,981	)
Class 4		(1,083,202	)		(365,347,762	)

Total capital share transactions		(69,688,761	)		(589,492,126	)

Net increase (decrease) in net assets		(174,228,946	)		(347,396,269	)
Net assets:
Beginning of period		1,707,102,962			2,054,499,231

End of period	$	1,532,874,016		$	1,707,102,962

Undistributed net investment income included in net assets:
End of period	$	13,698,228		$	35,287,355


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			TF-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Templeton Foreign VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eighteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Templeton Foreign VIP Fund (Fund) is included in this report. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers three classes of shares: Class 1, Class 2, and Class 4. Each class of shares may differ by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Investments in open-end mutual funds are valued at the closing NAV.


TF-16		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

b. Foreign Currency Translation

exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period.

c. Securities Lending

The Fund participates in an agency based securities lending program to earn additional income. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of Fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Fund. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned, net of fees paid to the securities lending agent and/or third-party vendor, is reported separately in the Statement of Operations. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower.

d. Income and Deferred Taxes


		Semiannual Report			TF-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

d. Income and Deferred Taxes (continued)

e. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the

dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

f. Accounting Estimates

g. Guarantees and Indemnifications


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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 1 Shares:
Shares sold		302,886		$	4,750,015			769,055		$	11,623,740
Shares issued in reinvestment of distributions		263,056			3,961,619			267,406			3,928,195
Shares redeemed		(906,379	)		(14,419,903	)		(965,539	)		(14,397,318	)

Net increase (decrease)		(340,437	)	$	(5,708,269	)		70,922		$	1,154,617

Class 2 Shares:
Shares sold		3,025,833		$	46,252,289			4,540,875		$	66,812,334
Shares issued in reinvestment of distributions		2,265,765			33,465,356			2,478,012			35,708,156
Shares redeemed		(9,346,735	)		(142,614,935	)		(22,468,600	)		(327,819,471	)

Net increase (decrease)		(4,055,137	)	$	(62,897,290	)		(15,449,713	)	$	(225,298,981	)

Class 4 Shares:
Shares sold		705,590		$	10,915,838			1,442,499		$	21,238,967
Shares issued in reinvestment of distributions		234,330			3,521,973			179,222			2,623,801
Shares redeemed		(994,934	)		(15,521,013	)		(26,802,238	)		(389,210,530	)

Net increase (decrease)		(55,014	)	$	(1,083,202	)		(25,180,517	)	$	(365,347,762	)

3. Transactions with Affiliates


Subsidiary		Affiliation
Templeton Investment Counsel, LLC (TIC)		Investment manager
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent

a. Management Fees

The Fund pays an investment management fee to TIC based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
0.900%		Up to and including $200 million
0.810%		Over $200 million, up to and including $700 million
0.775%		Over $700 million, up to and including $1.2 billion
0.750%		Over $1.2 billion, up to and including $1.3 billion
0.675%		Over $1.3 billion, up to and including $10 billion
0.655%		Over $10 billion, up to and including $15 billion
0.635%		Over $15 billion, up to and including $20 billion
0.615%		In excess of $20 billion


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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

3. Transactions with Affiliates (continued)

a. Management Fees (continued)

For the period ended June 30, 2018, the annualized gross effective investment management fee rate was 0.778% of the Fund’s average daily net assets.

b. Administrative Fees

Under an agreement with TIC, FT Services provides administrative services to the Fund. The fee is paid by TIC based on the Fund’s average daily net assets, and is not an additional expense of the Fund.

c. Distribution Fees

The Board has adopted distribution plans for Class 2 and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.25% and 0.35% per year of its average daily net assets of Class 2 and Class 4, respectively. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

Investor Services, under terms of an agreement, performs shareholder servicing for the Fund and is not paid by the Fund for the services.

e. Investments in Affiliated Management Investment Companies

The Fund invests in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the affiliated management investment companies, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. Prior to January 1, 2014, the waiver was accounted for as a reduction to management fees. During the period ended June 30, 2018, the Fund held investments in affiliated management investment companies as follows:


	Number of Shares Held at Beginning of Period	Gross Additions		Gross Reductions			Number of Shares Held at End of Period		Value at End of Period		Dividend Income		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 1.51%	25,636,178		400,352,542		(397,635,463	)		28,353,257	$	28,353,257	$	285,796	$	—	$	—

4. Expense Offset Arrangement

5. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains, if any. At December 31, 2017, the Fund had long-term capital loss carryforwards, not subject to expiration, of $79,259,651.


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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

At June 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


Cost of investments	$	1,300,280,052

Unrealized appreciation	$	321,413,830
Unrealized depreciation		(89,648,927	)

Net unrealized appreciation (depreciation)	$	231,764,903

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of passive foreign investment company shares, foreign capital gains tax and wash sales.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2018, aggregated $188,983,672 and $279,041,455, respectively.

At June 30, 2018, in connection with securities lending transactions, the Fund loaned equity investments and received $5,325,483 of cash collateral. The gross amount of recognized liability for such transactions is included in payable upon return of securities loaned in the Statement of Assets and Liabilities. The agreements can be terminated at any time.

7. Concentration of Risk

8. Credit Facility

9. Fair Value Measurements

•

Level 1 – quoted prices in active markets for identical financial instruments

•

Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)


		Semiannual Report			TF-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

9. Fair Value Measurements (continued)

•

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2018, in valuing the Fund’s assets carried at fair value, is as follows:


	Level 1		Level 2		Level 3		Total

Assets:
Investments in Securities:^a
Equity Investments:^b
Aerospace & Defense	$	39,910,558	$	108,164	$	—	$	40,018,722
All Other Equity Investments		1,463,672,976		—		—		1,463,672,976
Short Term Investments		28,353,257		—		—		28,353,257

Total Investments in Securities	$	1,531,936,791	$	108,164	$	—	$	1,532,044,955

^aFor detailed categories, see the accompanying Statement of Investments.

^bIncludes common and preferred stocks as well as other equity investments.

10. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations


Selected Portfolio

ADR		American Depositary Receipt

IDR		International Depositary Receipt

NVDR		Non-Voting Depositary Receipt


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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Tax Information (unaudited)

Templeton Foreign VIP Fund

The following table provides a detailed analysis of foreign tax paid, and foreign source income as reported by the Fund, to Class 1, Class 2 and Class 4 shareholders of record.


Class	Foreign Tax Paid Per Share	Foreign Source Income Per Share
Class 1	$0.0430	$0.4150
Class 2	$0.0430	$0.3791
Class 4	$0.0430	$0.3470

Foreign Source Income Per Share (Column 2) is the amount per share of income dividends attributable to foreign securities held by the Fund, plus any foreign taxes withheld on these dividends.


		Semiannual Report			TF-23

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Templeton Global Bond VIP Fund

This semiannual report for Templeton Global Bond VIP Fund covers the period ended June 30, 2018.

Class 1 Performance Summary as of June 30, 2018

The Fund’s Class 1 Shares had a -0.64% total return* for the six-month period ended June 30, 2018.


		Semiannual Report			TGB-1

TEMPLETON GLOBAL BOND VIP FUND

Fund Goal and Main Investments

The Fund seeks high current income, consistent with preservation of capital, with capital appreciation as a secondary consideration. Under normal market conditions, the Fund invests at least 80% of its net assets in bonds, which include debt securities of any maturity, such as bonds, notes, bills and debentures.

Fund Risks

All investments involve risks, including possible loss of principal. Foreign securities involve special risks, including currency fluctuations and economic and political uncertainties. Currency rates may fluctuate significantly over short periods of time, and can reduce returns. Sovereign debt securities are subject to various risks in addition to those relating to debt securities and foreign securities generally, including, but not limited to, the risk that a governmental entity may be unwilling or unable to pay interest and repay principal on its sovereign debt, or otherwise meet its obligations when due. Adverse conditions in a certain region or country can adversely affect securities of issuers in other countries whose economies appear to be unrelated. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities market. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. For comparison, the J.P. Morgan Global Government Bond Index had a -0.93% total return and the FTSE World Government Bond Index (WGBI), the new name for the Citigroup WGBI, had a -0.94% total return for the same period.¹

Economic and Market Overview

The six-month period began with sharply rising yields in the US and Europe as reflation sentiments appeared to return to markets. Deregulation efforts and tax cuts were anticipated to

Geographic Composition*

Based on Total Net Assets as of 6/30/18

LOGO

*Figures represent the net Fund exposure and include certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of any derivatives or other factors.

**The Fund’s supranational investment was denominated in the Mexican peso.

add stimulus to an already strong US economy. The 10-year US Treasury yield rose 45 basis points (bps), finishing February at 2.86%. In Europe, the 10-year German bund yield rose 27 bps during January, reaching its peak yield for the period at 0.70% on February 2, its highest level since 2015. Markets appeared to initially anticipate upcoming rate adjustments from the European Central Bank (ECB) later in the year, but those expectations would diminish by the end of the period. Overall, the US dollar was broadly weaker against the euro and global currencies during the opening months of the period, but that trend would sharply reverse in April.

In February, Jerome Powell took over as US Federal Reserve (Fed) Chairman, replacing Janet Yellen. The Fed continued to unwind its balance sheet throughout the period, and raised the federal funds target rate 25 basis points twice; once in March and again in June. In Japan, Haruhiko Kuroda was reappointed to a second five-year term as Bank of Japan (BOJ) Governor, effectively extending the BOJ’s current monetary accommodation indefinitely.

By March, the rising yield trends in the US and Europe stalled and moderately reversed. Protectionist trade activity from the US in the form of steel and aluminum tariffs, as well as sector-specific tariffs on China, appeared to amplify risk

1. Source: Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).


TGB-2		Semiannual Report

TEMPLETON GLOBAL BOND VIP FUND

aversion across global financial markets. Credit spreads widened across investment-grade and high yield credit tiers in the US and Europe during the month, ultimately widening even further by the end of June.

In April, US Treasury yields rose sharply and the US dollar strengthened broadly as reflation sentiments appeared to again return to financial markets. The 10-year US Treasury yield rose above 3.00% for the first time in more than four years, ultimately reaching 3.11% on May 17, its highest level since 2011. However, risk aversion returned to global bond markets in the second half of May, as political issues in Italy raised concerns over the euro and Italian debt ratios. Consequently, yields in Italy, Spain, and much of peripheral Europe rose sharply, while yields in Germany, France, and the US declined as investors shifted to what they perceived as less risky investments. Several Latin American countries also saw rising yields and depreciations of their exchange rates during May, as upcoming elections in Mexico and Brazil, as well as policy concerns in Argentina appeared to increase regional volatility.

In the second half of June, a return of tariff threats from the US reintroduced risk aversion, driving the 10-year US Treasury yield back to where it began the month at 2.86%. Overall, the

10-year US Treasury yield finished the period 45 bps higher. In Europe, ECB president Mario Draghi provided updated guidance on the ECB’s monetary policy timeline at its June 14 meeting: The net asset purchase program will be reduced to €15 billion per month for October, November and December, and conclude at the end 2018. Draghi also indicated that rates would likely remain unchanged until at least the summer of 2019. The 10-year German bund correspondingly finished June four bps lower for the month at 0.30%, finishing the six-month period 13 bps lower than where it started.

On the whole, duration exposures in the US and in several parts of the world faced headwinds from rising rates during the period, with the exception of core European countries, which began the period with rising yields, but finished with sharply declining yields. Additionally, the US dollar started the period weaker before significantly strengthening against global currencies over the final three months. Avoiding US Treasury duration proved important to performance during the period, as did long exposure to the US dollar.

Investment Strategy

We invest selectively in bonds around the world based upon our assessment of changing market, political and economic conditions. While seeking opportunities, we monitor various factors including changes in interest rates, currency exchange rates and credit risks. We seek to manage the Fund’s exposure


Currency Composition*
6/30/18
	% of Total Net Assets
Americas		159.9%
U.S. Dollar		121.2%
Mexican Peso		19.8%
Brazilian Real		10.5%
Colombian Peso		4.2%
Argentine Peso		4.1%
Peruvian Nuevo Sol		0.1%
Middle East & Africa		1.7%
Ghanaian Cedi		1.7%
Australia & New Zealand		-7.9%
New Zealand Dollar		0.0%	**
Australian Dollar		-7.9%
Asia Pacific		-13.6%
Indian Rupee		10.2%
Indonesian Rupiah		9.0%
Philippine Peso		1.6%
South Korean Won		0.0%	**
Japanese Yen		-34.4%
Europe		-40.1%
Euro		-40.1%

**Rounds to less than 0.1%.

to various currencies and regularly utilize currency and cross currency forward contracts and may also use currency and currency index futures contracts and other derivative instruments.

What is a currency forward contract?

A currency forward contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date. Currency forward contracts are privately traded in the interbank market, not on a centralized exchange.

Manager’s Discussion

On the whole, we continued to position our strategies for rising rates by maintaining low portfolio duration and aiming at a negative correlation with US Treasury returns. We also


		Semiannual Report			TGB-3

TEMPLETON GLOBAL BOND VIP FUND

What is a futures contract?

A futures contract is an agreement between the Fund and a counterparty made through a US or foreign futures exchange to buy or sell an underlying instrument or asset at a specific price on a future date.

continued to actively seek select duration exposures that we believe can offer positive real yields without taking undue interest-rate risk, favoring countries that have solid underlying fundamentals and prudent fiscal and monetary policies. We continued to prefer local-currency positions in specific countries that we believed to have resilient economies and relatively higher, maintainable rate differentials. During the period, we held notable local-currency duration exposures in Brazil, Argentina, Colombia, Indonesia and India, and notable currency exposure to the Mexican peso. We also continued to hold net-negative positions in the euro and Japanese yen as hedges against a broadly strengthening US dollar and as directional views on the currencies. We also held net-negative positioning in the Australian dollar based on the Reserve Bank of Australia’s continued rate accommodation, and as a partial hedge against potential economic risks in China as well as broad-based beta risks across emerging markets. In credit markets, we continued to see areas of value in specific sovereign credits, but we largely preferred the risk-adjusted returns in specific areas of the local-currency bond markets over the more fully valued credit markets. Overall, the strategy was positioned for depreciation of the euro and yen, rising US Treasury yields, and currency appreciation in select emerging markets. During the period, we used currency forward contracts to actively manage currencies. We also used interest-rate swaps to tactically manage duration exposures.

What is duration?

Duration is a measure of a bond’s price sensitivity to interest-rate changes. In general, a portfolio of securities with a lower duration can be expected to be less sensitive to interest-rate changes than a portfolio with a higher duration.

What is an interest-rate swap?

An interest-rate swap is an agreement between two parties to exchange interest-rate payment obligations, generally one based on an interest rate fixed to maturity and the other based on an interest rate that changes in accordance with changes in a designated benchmark (for example, LIBOR, prime, commercial paper or other benchmarks).

During the period, the Fund’s negative absolute performance was primarily due to currency positions. Interest-rate strategies

and sovereign credit exposures had largely neutral effects on absolute results. Among currencies, positions in Latin America and Asia ex-Japan largely detracted from absolute performance (the Brazilian real, Argentine peso and Indian rupee detracted, while the Mexican peso contributed). The Fund’s net-negative position in the euro contributed to absolute results, while its net-negative position in the Japanese yen had a largely neutral effect. The Fund maintained a defensive approach regarding interest rates in developed markets, while holding duration exposures in select emerging markets. Select duration exposures in Latin America detracted from absolute performance, while negative duration exposure to US Treasuries moderately contributed.

On a relative basis, currency positions, interest-rate strategies and sovereign credit exposures had largely neutral effects on the Fund’s relative performance during the period. Among currencies, overweighted positions in Latin America and Asia ex-Japan largely detracted from relative results (the Brazilian real, Argentine peso and Indian rupee detracted, while the Mexican peso contributed). The Fund’s underweighted position in the euro contributed to relative results, while its underweighted position in the Japanese yen detracted. The Fund maintained a defensive approach regarding interest rates in developed markets, while holding duration exposures in select emerging markets. Select overweighted duration exposures in Latin America detracted from relative performance, while underweighted duration exposure in the US contributed.

Thank you for your participation in Templeton Global Bond VIP Fund. We look forward to serving your future investment needs.


TGB-4		Semiannual Report

TEMPLETON GLOBAL BOND VIP FUND

Class 1 Fund Expenses

Actual Fund Expenses

The table below provides information about the actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of ongoing Fund expenses but does not include the effect of ongoing Contract expenses, is used to calculate the “Ending Account Value.” You can estimate the Fund-level expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number under the headings “Actual” and “Fund-Level Expenses Paid During Period” (if Fund-Level Expenses Paid During Period were $ 7.50, then 8.6 × $7.50 = $64.50). In this illustration, the estimated expenses paid this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Actual
(actual return after expenses)

Hypothetical
(5% annual return before expenses)

Share Class

Beginning Account
Value 1/1/18

Ending Account
Value 6/30/18

Fund-Level

Expenses Paid

During Period
1/1/18–6/30/18^1,2

Ending Account

Value 6/30/18

Fund-Level

Expenses Paid
During Period
1/1/18–6/30/18^1,2

Net
Annualized
Expense
Ratio²

Class 1

$1,000

$993.60

$2.22

$1,022.56

$2.26

0.45%

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above — in the far right column — multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include any ongoing expenses of the Contract for which the Fund is an investment option or acquired fund fees and expenses.


		Semiannual Report			TGB-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Templeton Global Bond VIP Fund


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 1
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$17.17			$16.85			$16.34			$18.56			$19.15			$20.01


Income from investment operations^a:

Net investment income^b		0.41			0.83			0.62			0.52			0.58			0.64

Net realized and unrealized gains (losses)		(0.52	)		(0.46	)		(0.10	)		(1.22	)		(0.16	)		(0.30	)

Total from investment operations		(0.11	)		0.37			0.52			(0.70	)		0.42			0.34


Less distributions from:

Net investment income and net foreign currency gains		—			—			—			(1.43	)		(1.01	)		(0.96	)

Net realized gains		—			(0.05	)		(0.01	)		(0.09	)		—			(0.24	)

Total distributions		—			(0.05	)		(0.01	)		(1.52	)		(1.01	)		(1.20	)

Redemption fees		—			—			—			—			—	^c		—	^c

Net asset value, end of period		$17.06			$17.17			$16.85			$16.34			$18.56			$19.15


Total return^d		(0.64)%			2.15%			3.21%			(4.10)%			2.12%			1.89%

Ratios to average net assets^e

Expenses before waiver and payments by affiliates and expense reduction		0.55%			0.53%			0.53%			0.52%			0.51%			0.51%

Expenses net of waiver and payments by affiliates		0.46%			0.46%			0.48%			0.52%	^g		0.51%			0.51%

Expenses net of waiver and payments by affiliates and expense reduction		0.45%			0.46%	^f		0.48%	^f		0.52%	^f,g		0.51%	^f		0.51%	^f

Net investment income		4.80%			4.81%			3.88%			2.99%			3.08%			3.26%

Supplemental data

Net assets, end of period (000’s)		$275,800			$286,502			$241,792			$292,802			$323,491			$280,963

Portfolio turnover rate		11.89%			37.97%			59.00%			51.58%			39.14%			34.39%

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gBenefit of waiver and payments by affiliates rounds to less than 0.01%.


TGB-6		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Global Bond VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 2
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$16.51			$16.25			$15.80			$17.99			$18.60			$19.47


Income from investment operations^a:

Net investment income^b		0.38			0.76			0.56			0.46			0.52			0.57

Net realized and unrealized gains (losses)		(0.50	)		(0.45	)		(0.10	)		(1.17	)		(0.17	)		(0.27	)


Total from investment operations		(0.12	)		0.31			0.46			(0.71	)		0.35			0.30


Less distributions from:

Net investment income and net foreign currency gains		—			—			—			(1.39	)		(0.96	)		(0.93	)

Net realized gains		—			(0.05	)		(0.01	)		(0.09	)		—			(0.24	)


Total distributions		—			(0.05	)		(0.01	)		(1.48	)		(0.96	)		(1.17	)


Redemption fees		—			—			—			—			—	^c		—	^c


Net asset value, end of period		$16.39			$16.51			$16.25			$15.80			$17.99			$18.60


Total return^d		(0.73)%			1.93%			2.94%			(4.30)%			1.83%			1.63%

Ratios to average net assets^e

Expenses before waiver and payments by affiliates and expense reduction		0.80%			0.78%			0.78%			0.77%			0.76%			0.76%

Expenses net of waiver and payments by affiliates		0.71%			0.71%			0.73%			0.77%	^g		0.76%			0.76%

Expenses net of waiver and payments by affiliates and expense reduction		0.70%			0.71%	^f		0.73%	^f		0.77%	^f,g		0.76%	^f		0.76%	^f

Net investment income		4.55%			4.56%			3.63%			2.74%			2.83%			3.01%

Supplemental data

Net assets, end of period (000’s)		$2,642,931			$2,730,081			$2,812,535			$2,971,667			$3,177,638			$2,826,039

Portfolio turnover rate		11.89%			37.97%			59.00%			51.58%			39.14%			34.39%

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gBenefit of waiver and payments by affiliates rounds to less than 0.01%.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			TGB-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Global Bond VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 4
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$16.88			$16.62			$16.18			$18.38			$18.97			$19.82


Income from investment operations^a:

Net investment income^b		0.38			0.76			0.56			0.46			0.51			0.56

Net realized and unrealized gains (losses)		(0.52	)		(0.45	)		(0.11	)		(1.21	)		(0.18	)		(0.28	)

Total from investment operations		(0.14	)		0.31			0.45			(0.75	)		0.33			0.28


Less distributions from:

Net investment income and net foreign currency gains		—			—			—			(1.36	)		(0.92	)		(0.89	)

Net realized gains		—			(0.05	)		(0.01	)		(0.09	)		—			(0.24	)

Total distributions		—			(0.05	)		(0.01	)		(1.45	)		(0.92	)		(1.13	)

Redemption fees		—			—			—			—			—	^c		—	^c

Net asset value, end of period		$16.74			$16.88			$16.62			$16.18			$18.38			$18.97


Total return^d		(0.83)%			1.76%			2.87%			(4.39)%			1.69%			1.54%

Ratios to average net assets^e

Expenses before waiver and payments by affiliates and expense reduction		0.90%			0.88%			0.88%			0.87%			0.86%			0.86%

Expenses net of waiver and payments by affiliates		0.81%			0.81%			0.83%			0.87%	^g		0.86%			0.86%

Expenses net of waiver and payments by affiliates and expense reduction		0.80%			0.81%	^f		0.83%	^f		0.87%	^f,g		0.86%	^f		0.86%	^f

Net investment income		4.45%			4.46%			3.53%			2.64%			2.73%			2.91%

Supplemental data

Net assets, end of period (000’s)		$94,514			$98,934			$96,798			$103,045			$111,199			$118,145

Portfolio turnover rate		11.89%			37.97%			59.00%			51.58%			39.14%			34.39%

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gBenefit of waiver and payments by affiliates rounds to less than 0.01%.


TGB-8		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2018 (unaudited)


Templeton Global Bond VIP Fund

Principal Amount*

Value

Foreign Government and Agency Securities 55.8%

Argentina 3.6%

Argentine Bonos del Tesoro,

21.20%, 9/19/18

64,168,000

ARS

2,127,569

18.20%, 10/03/21

813,341,000

ARS

24,371,979

16.00%, 10/17/23

844,288,000

ARS

26,224,971

senior note, 15.50%, 10/17/26

1,668,306,000

ARS

52,169,512

Government of Argentina,

3.75%, 2/08/19

34,010,000

ARS

1,260,328

FRN, 27.947%, (ARS Badlar + 2.00%), 4/03/22

24,036,000

ARS

758,821

106,913,180

Brazil 8.7%

Letra Tesouro Nacional,

Strip, 1/01/19

33,250^b

BRL

8,305,310

Strip, 7/01/19

102,840^b

BRL

24,689,429

Strip, 7/01/20

118,041^b

BRL

25,774,260

Strip, 7/01/21

24,360^b

BRL

4,773,974

Nota Do Tesouro Nacional, 10.00%, 1/01/21

38,520^b

BRL

10,101,535

10.00%, 1/01/23

522,145^b

BRL

132,146,066

10.00%, 1/01/25

69,029^b

BRL

16,876,984

10.00%, 1/01/27

46,543^b

BRL

11,088,084

Index Linked, 6.00%, 5/15/19

2,087^b

BRL

1,718,404

Index Linked, 6.00%, 8/15/22

18,002^b

BRL

14,776,874

Index Linked, 6.00%, 5/15/23

4,510^b

BRL

3,686,569

Index Linked, 6.00%, 8/15/24

3,110^b

BRL

2,549,007

senior note, 10.00%, 1/01/19

21,390^b

BRL

5,603,260

262,089,756

Colombia 4.1%

Government of Colombia,

senior bond, 7.75%, 4/14/21

2,386,000,000

COP

854,501

senior bond, 4.375%, 3/21/23

362,000,000

COP

117,950

senior bond, 9.85%, 6/28/27

576,000,000

COP

248,297

Titulos de Tesoreria,

B, 5.00%, 11/21/18

2,882,000,000

COP

986,156

B, 7.75%, 9/18/30

140,945,200,000

COP

51,802,083

B, 7.00%, 6/30/32

5,967,000,000

COP

2,030,588

senior bond, B, 11.25%, 10/24/18

5,135,000,000

COP

1,799,360

senior bond, B, 11.00%, 7/24/20

9,167,000,000

COP

3,472,751

senior bond, B, 7.00%, 5/04/22

10,237,000,000

COP

3,656,174

senior bond, B, 10.00%, 7/24/24

40,977,000,000

COP

16,636,715

senior bond, B, 7.50%, 8/26/26

77,594,200,000

COP

28,044,492

senior bond, B, 6.00%, 4/28/28

42,303,600,000

COP

13,878,563

senior note, B, 7.00%, 9/11/19

4,056,000,000

COP

1,417,722

124,945,352

Ghana 1.7%

Government of Ghana,

24.75%, 3/01/21

690,000

GHS

164,138

16.25%, 5/17/21

7,250,000

GHS

1,458,591

24.50%, 6/21/21

80,000

GHS

19,161

24.75%, 7/19/21

1,190,000

GHS

286,156

18.75%, 1/24/22

26,840,000

GHS

5,723,388


		Semiannual Report			TGB-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)


	Principal Amount*			Value
Foreign Government and Agency Securities (continued)
Ghana (continued)
Government of Ghana, (continued)
17.60%, 11/28/22		370,000	GHS	$	76,531
19.75%, 3/25/24		26,840,000	GHS		5,975,788
19.00%, 11/02/26		80,510,000	GHS		17,400,956
senior bond, 19.75%, 3/15/32		80,510,000	GHS		18,140,562
senior note, 21.50%, 3/09/20		1,270,000	GHS		278,283
senior note, 18.50%, 6/01/20		500,000	GHS		105,325
senior note, 18.25%, 9/21/20		480,000	GHS		100,338
senior note, 16.50%, 3/22/21		1,730,000	GHS		350,365

					50,079,582

India 7.9%
Government of India,
senior bond, 8.20%, 2/15/22		500,000,000	INR		7,358,385
senior bond, 8.35%, 5/14/22		212,700,000	INR		3,152,285
senior bond, 8.08%, 8/02/22		1,783,000,000	INR		26,195,463
senior bond, 8.13%, 9/21/22		28,000,000	INR		411,963
senior bond, 9.15%, 11/14/24		2,409,000,000	INR		37,006,265
senior note, 8.27%, 6/09/20		1,222,000,000	INR		18,068,857
senior note, 7.80%, 4/11/21		1,980,300,000	INR		28,963,261
senior note, 8.79%, 11/08/21		653,000,000	INR		9,807,305
senior note, 8.15%, 6/11/22		1,621,000,000	INR		23,813,025
senior note, 6.84%, 12/19/22		98,000,000	INR		1,373,374
senior note, 7.16%, 5/20/23		133,700,000	INR		1,887,629
senior note, 8.83%, 11/25/23		2,983,900,000	INR		45,102,830
senior note, 7.68%, 12/15/23		1,376,000,000	INR		19,808,993
senior note, 6.79%, 5/15/27		1,142,800,000	INR		15,390,992

					238,340,627

Indonesia 4.1%
Government of Indonesia,
senior bond, FR34, 12.80%, 6/15/21		324,406,000,000	IDR		25,744,211
senior bond, FR35, 12.90%, 6/15/22		71,229,000,000	IDR		5,835,507
senior bond, FR39, 11.75%, 8/15/23		5,491,000,000	IDR		446,388
senior bond, FR40, 11.00%, 9/15/25		46,856,000,000	IDR		3,807,992
senior bond, FR43, 10.25%, 7/15/22		147,832,000,000	IDR		11,214,284
senior bond, FR44, 10.00%, 9/15/24		4,454,000,000	IDR		342,675
senior bond, FR46, 9.50%, 7/15/23		226,780,000,000	IDR		17,180,218
senior bond, FR47, 10.00%, 2/15/28		12,000,000	IDR		942
senior bond, FR52, 10.50%, 8/15/30		6,960,000,000	IDR		570,157
senior bond, FR59, 7.00%, 5/15/27		47,752,000,000	IDR		3,150,701
senior bond, FR61, 7.00%, 5/15/22		244,849,000,000	IDR		16,718,241
senior bond, FR63, 5.625%, 5/15/23		258,951,000,000	IDR		16,868,871
senior bond, FR64, 6.125%, 5/15/28		37,000,000	IDR		2,312
senior bond, FR68, 8.375%, 3/15/34		81,180,000,000	IDR		5,717,442
senior bond, FR70, 8.375%, 3/15/24		78,915,000,000	IDR		5,637,490
senior bond, FR71, 9.00%, 3/15/29		51,222,000,000	IDR		3,811,265
senior bond, FR73, 8.75%, 5/15/31		85,845,000,000	IDR		6,241,284

					123,289,980


TGB-10		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

Principal Amount*

Value

Foreign Government and Agency Securities (continued)

Mexico 16.9%

Government of Mexico,

senior bond, M, 8.00%, 6/11/20

3,814,000^d

MXN

19,320,536

senior bond, M, 6.50%, 6/10/21

18,568,200^d

MXN

90,582,288

senior note, M, 5.00%, 12/11/19

18,742,300^d

MXN

90,827,100

senior note, M 10, 8.50%, 12/13/18

60,159,700^d

MXN

304,354,897

Mexican Udibonos,

Index Linked, 4.00%, 6/13/19

465,586^f

MXN

2,350,166

Index Linked, 2.50%, 12/10/20

366,672^f

MXN

1,792,202

509,227,189

Peru 0.1%

Government of Peru, senior bond, 7.84%, 8/12/20

11,090,000

PEN

3,729,703

Philippines 1.2%

Government of the Philippines,

senior note, 3.375%, 8/20/20

1,102,110,000

PHP

20,169,168

senior note, 7-51, 5.00%, 8/18/18

64,060,000

PHP

1,201,724

senior note, 7-56, 3.875%, 11/22/19

813,510,000

PHP

15,126,270

36,497,162

South Korea 6.6%

Korea Monetary Stabilization Bond,

senior note, 1.72%, 12/02/18

8,710,000,000

KRW

7,810,255

senior note, 2.06%, 12/02/19

82,700,000,000

KRW

74,230,329

Korea Treasury Bond,

senior note, 1.75%, 12/10/18

107,140,000,000

KRW

96,102,673

senior note, 1.25%, 12/10/19

18,280,000,000

KRW

16,221,886

senior note, 3.00%, 3/10/23

3,919,000,000

KRW

3,609,777

197,974,920

Supranational 0.3%

Inter-American Development Bank, senior bond, 7.50%, 12/05/24

200,000,000

MXN

9,821,280

Ukraine 0.6%

h,i,j

Government of Ukraine, 144A, VRI, GDP Linked Security, 5/31/40

29,791,000

18,845,936

Total Foreign Government and Agency Securities (Cost $1,842,724,784)

1,681,754,667

Short Term Investments 39.9%

Foreign Government and Agency Securities 5.0%

Argentina 0.5%

Argentina Treasury Bill, 9/14/18 - 10/12/18

32,201,000

ARS

1,154,269

Letras del Banco Central de la Republica Argentina, Strip, 7/18/18 - 11/21/18

472,458,000

ARS

15,216,009

16,370,278

Mexico 2.3%

Mexico Treasury Bill, 7/05/18 - 5/23/19

143,049,780^l

MXN

68,804,900

Philippines 0.4%

Philippine Treasury Bill, 8/29/18 - 12/12/18

690,620,000

PHP

12,831,154


		Semiannual Report			TGB-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)


		Principal Amount*			Value
	Short Term Investments (continued)
	Foreign Government and Agency Securities (continued)
	South Korea 1.8%
	Korea Monetary Stabilization Bond, senior note, 1.61%, 10/08/18		60,000,000,000	KRW	$	53,787,252


	Total Foreign Government and Agency Securities (Cost $158,783,902)					151,793,584


	U.S. Government and Agency Securities 3.1%
	United States 3.1%
k	U.S. Treasury Bill, 9/13/18 - 2/28/19		76,809,000			76,090,547
	U.S. Treasury Note,
	1.50%, 8/31/18		8,602,000			8,596,280
	2.75%, 2/15/19		8,339,000			8,365,222


	Total U.S. Government and Agency Securities (Cost $93,081,306)					93,052,049


	Total Investment before Money Market Funds and Repurchase Agreements (Cost $2,094,589,992)					1,926,600,300


		Shares

	Money Market Funds (Cost $805,945,058) 26.8%
	United States 26.8%
m,n	Institutional Fiduciary Trust Money Market Portfolio, 1.51%		805,945,058			805,945,058


		Principal Amount*
	Repurchase Agreements (Cost $151,947,582) 5.0%
	United States 5.0%
o	Joint Repurchase Agreement, 2.10%, 7/02/18 (Maturity Value $151,974,172)
	BNP Paribas Securities Corp. (Maturity Value $54,537,451)
	Deutsche Bank Securities Inc. (Maturity Value $1,995,421)
	HSBC Securities (USA) Inc. (Maturity Value $95,441,300)
	Collateralized by U.S. Government Agency Securities, 0.00% - 3.625%, 9/18/18 - 6/19/23; ^kU.S. Treasury Bill, 10/04/18 - 10/18/18; and U.S. Treasury Note, 2.00% - 3.50%, 5/15/20 - 8/31/21 (valued at $155,072,942)		151,947,582			151,947,582


	Total Investments (Cost $3,052,482,632) 95.7%					2,884,492,940
	Other Assets, less Liabilities 4.3%					128,751,988

	Net Assets 100.0%				$	3,013,244,928


TGB-12		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

^*The principal amount is stated in U.S. dollars unless otherwise indicated.

^aThe coupon rate shown represents the rate at period end.

^bPrincipal amount is stated in 1,000 Brazilian Real Units.

^cRedemption price at maturity and coupon payment are adjusted for inflation. See Note 1(g).

^dPrincipal amount is stated in 100 Mexican Peso Units.

^ePrincipal amount of security is adjusted for inflation. See Note 1(g).

^fPrincipal amount is stated in 100 Unidad de Inversion Units.

^gA supranational organization is an entity formed by two or more central governments through international treaties.

^hNon-income producing.

ⁱSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees.

^jThe principal represents the notional amount. See Note 1(d) regarding value recovery instruments.

^kThe security was issued on a discount basis with no stated coupon rate.

^lPrincipal amount is stated in 10 Mexican Peso Units.

^mSee Note 3(e) regarding investments in affiliated management investment companies.

ⁿThe rate shown is the annualized seven-day effective yield at period end.

^oSee Note 1(c) regarding joint repurchase agreement.

At June 30, 2018, the Fund had the following forward exchange contracts outstanding. See Note 1(d).


Forward Exchange Contracts
Currency	Counterparty	^a	Type	Quantity	Contract Amount	*		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts
Brazilian Real	CITI		Buy	206,375,000	49,201,335		EUR	7/05/18	$	—	$	(4,293,805	)
Brazilian Real	CITI		Sell	206,375,000	46,409,778		EUR	7/05/18		1,030,828		—
Euro	DBAB		Sell	8,136,104	9,522,496			7/05/18		12,423		—
Japanese Yen	DBAB		Buy	229,660,000	2,082,517			7/05/18		—		(6,952	)
Japanese Yen	DBAB		Sell	229,660,000	2,120,904			7/05/18		45,339		—
Euro	JPHQ		Sell	32,859,900	40,725,739			7/06/18		2,313,817		—
Euro	BOFA		Sell	24,933,432	30,142,392			7/09/18		989,670		—
Euro	GSCO		Sell	8,105,300	10,005,993			7/09/18		529,096		—
Euro	UBSW		Sell	8,311,299	10,256,559			7/09/18		538,803		—
Euro	HSBK		Sell	33,800,018	41,617,118			7/10/18		2,094,436		—
Euro	JPHQ		Sell	7,171,498	8,861,677			7/10/18		475,976		—
Japanese Yen	BZWS		Sell	1,712,605,900	16,096,147			7/11/18		611,985		—
Japanese Yen	DBAB		Sell	770,370,000	6,919,077			7/11/18		—		(46,060	)
Australian Dollar	JPHQ		Sell	6,994,145	5,348,632			7/12/18		171,668		—
Euro	DBAB		Sell	25,440,500	31,645,565			7/12/18		1,893,305		—
Japanese Yen	CITI		Sell	138,680,000	1,257,162			7/12/18		3,230		—
Euro	BOFA		Sell	17,769,000	22,138,752			7/13/18		1,356,638		—
Euro	GSCO		Sell	1,789,884	2,229,139			7/13/18		135,742		—
Indian Rupee	JPHQ		Buy	179,045,721	2,725,616			7/13/18		—		(115,585	)
Japanese Yen	CITI		Sell	261,800,000	2,463,594			7/13/18		96,260		—
Japanese Yen	DBAB		Sell	1,406,600,000	13,241,081			7/13/18		521,857		—
Australian Dollar	JPHQ		Sell	25,071,750	19,085,619			7/16/18		527,598		—
Euro	HSBK		Sell	8,692,000	10,785,772			7/16/18		617,580		—
Euro	JPHQ		Sell	30,863,836	36,487,319			7/16/18		381,770		—
Indian Rupee	JPHQ		Buy	179,029,279	2,712,770			7/16/18		—		(104,112	)
Japanese Yen	BZWS		Sell	2,516,120,000	22,820,294			7/17/18		61,940		—
Japanese Yen	HSBK		Sell	536,380,000	4,867,332			7/17/18		15,765		—
Euro	GSCO		Sell	1,898,500	2,367,809			7/18/18		146,548		—


		Semiannual Report			TGB-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

Forward Exchange Contracts (continued)


Currency	Counterparty	^a	Type	Quantity	Contract Amount	*	Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts (continued)
Euro	MSCO		Sell	15,372,250	17,947,563		7/19/18	$	—	$	(39,440	)
Indian Rupee	DBAB		Buy	1,228,359,494	18,834,093		7/19/18		—		(943,277	)
Japanese Yen	JPHQ		Sell	1,886,055,000	17,696,393		7/20/18		633,466		—
Euro	JPHQ		Sell	28,236,000	32,751,501		7/23/18		—		(297,196	)
Euro	MSCO		Sell	7,686,125	9,107,097		7/23/18		110,907		—
Euro	MSCO		Sell	7,686,125	8,921,362		7/23/18		—		(74,828	)
Euro	SCNY		Sell	4,975,000	5,803,636		7/23/18		—		(19,330	)
Japanese Yen	JPHQ		Sell	2,504,432,000	22,796,635		7/23/18		134,644		—
Indian Rupee	JPHQ		Buy	200,268,000	2,999,708		7/24/18		—		(84,952	)
South Korean Won	HSBK		Sell	18,482,000,000	17,469,635		7/24/18		888,645		—
Euro	DBAB		Sell	4,518,681	5,248,561		7/25/18		—		(41,099	)
Indian Rupee	DBAB		Buy	79,271,000	1,186,248		7/25/18		—		(32,682	)
Japanese Yen	MSCO		Sell	287,615,000	2,653,838		7/26/18		50,743		—
Indian Rupee	DBAB		Buy	838,950,988	12,483,461		7/27/18		—		(278,431	)
Indonesian Rupiah	HSBK		Buy	424,000,000,000	31,454,006		7/27/18		—		(1,913,829	)
Euro	BOFA		Sell	33,910,662	39,663,946		7/30/18		—		(47,600	)
Japanese Yen	DBAB		Sell	9,266,366,552	86,107,180		7/30/18		2,217,386		—
Japanese Yen	JPHQ		Sell	490,100,000	4,555,743		7/30/18		118,795		—
Euro	BZWS		Sell	22,495,165	27,604,942		7/31/18		1,259,573		—
Euro	CITI		Sell	77,832,770	94,893,713		7/31/18		3,739,326		—
Euro	GSCO		Sell	2,227,000	2,718,343		7/31/18		110,177		—
Euro	SCNY		Sell	12,300,264	15,010,689		7/31/18		605,149		—
Japanese Yen	BZWS		Sell	1,079,470,000	10,027,822		7/31/18		254,513		—
Japanese Yen	GSCO		Sell	944,420,000	8,695,356		7/31/18		144,763		—
Japanese Yen	MSCO		Sell	287,615,000	2,612,022		7/31/18		8,012		—
Euro	HSBK		Sell	25,974,891	31,678,717		8/02/18		1,253,199		—
Euro	JPHQ		Sell	11,263,000	13,710,168		8/02/18		517,327		—
Indian Rupee	HSBK		Buy	679,529,000	10,044,032		8/02/18		—		(166,813	)
Japanese Yen	DBAB		Sell	115,414,516	1,048,463		8/02/18		3,372		—
Euro	GSCO		Sell	13,037,050	15,851,749		8/03/18		579,670		—
Indian Rupee	JPHQ		Buy	378,455,000	5,834,503		8/06/18		—		(336,676	)
Indian Rupee	HSBK		Buy	240,033,500	3,695,381		8/08/18		—		(209,410	)
Japanese Yen	JPHQ		Sell	1,719,500,000	15,884,747		8/08/18		307,712		—
Japanese Yen	SCNY		Sell	1,720,000,000	15,925,484		8/08/18		343,920		—
Euro	DBAB		Sell	13,483,000	16,170,566		8/09/18		368,535		—
Euro	JPHQ		Sell	9,220,500	11,061,649		8/09/18		255,254		—
Japanese Yen	BZWS		Sell	1,720,220,000	15,901,461		8/09/18		316,775		—
Japanese Yen	CITI		Sell	708,852,119	6,541,892		8/09/18		119,902		—
Euro	BZWS		Sell	7,003,000	8,366,449		8/10/18		158,302		—
Euro	JPHQ		Sell	6,147,005	7,342,782		8/10/18		137,938		—
Australian Dollar	JPHQ		Sell	6,989,428	5,346,108		8/13/18		172,099		—
Japanese Yen	CITI		Sell	1,245,045,665	11,473,493		8/13/18		190,479		—
Euro	CITI		Sell	37,063,039	44,531,241		8/14/18		1,076,171		—
Euro	HSBK		Sell	1,800,000	2,164,567		8/14/18		54,132		—
Japanese Yen	CITI		Sell	493,314,665	4,417,414		8/14/18		—		(53,490	)
Australian Dollar	JPHQ		Sell	25,071,750	18,971,292		8/15/18		411,520		—
Euro	DBAB		Sell	5,008,730	6,022,622		8/15/18		149,600		—
Japanese Yen	HSBK		Sell	413,563,000	3,807,780		8/15/18		59,393		—
Japanese Yen	JPHQ		Sell	2,553,380,000	23,997,594		8/15/18		854,669		—


TGB-14		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)


Forward Exchange Contracts (continued)
Currency	Counterparty^a		Type		Quantity		Contract Amount*		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts (continued)
Euro		BOFA		Sell		5,251,819		6,329,177		8/16/18	$	170,628	$	—
Euro		SCNY		Sell		657,000		792,033		8/16/18		21,602		—
Indian Rupee		HSBK		Buy		402,232,000		5,905,623		8/16/18		—		(70,779	)
Japanese Yen		CITI		Sell		183,340,000		1,684,599		8/16/18		22,751		—
Japanese Yen		JPHQ		Sell		709,066,000		6,599,478		8/16/18		172,291		—
Japanese Yen		SCNY		Sell		340,600,700		3,129,112		8/16/18		41,805		—
Euro		JPHQ		Sell		15,313,111		18,259,200		8/17/18		300,839		—
South Korean Won		HSBK		Sell		75,818,000,000		70,851,322		8/17/18		2,776,188		—
Euro		JPHQ		Sell		32,873,792		38,987,759		8/20/18		425,987		—
Japanese Yen		BOFA		Sell		903,250,850		8,248,866		8/20/18		59,156		—
Euro		JPHQ		Sell		14,818,028		17,609,744		8/21/18		226,445		—
Euro		UBSW		Sell		1,922,305		2,286,024		8/21/18		30,933		—
Japanese Yen		CITI		Sell		1,599,308,500		14,530,384		8/21/18		28,519		—
Japanese Yen		DBAB		Sell		1,635,382,000		14,861,705		8/21/18		32,740		—
Australian Dollar		CITI		Sell		13,307,000		9,976,258		8/22/18		125,347		—
Euro		BOFA		Sell		7,066,000		8,369,465		8/22/18		79,550		—
Euro		UBSW		Sell		678,250		803,543		8/22/18		7,812		—
Japanese Yen		BOFA		Sell		1,105,842,500		10,034,868		8/22/18		6,821		—
Japanese Yen		CITI		Sell		376,247,000		3,411,403		8/22/18		—		(496	)
Euro		UBSW		Sell		11,641,500		13,779,054		8/23/18		120,019		—
Japanese Yen		CITI		Sell		1,866,452,000		16,891,274		8/23/18		—		(35,391	)
Euro		DBAB		Sell		14,940,282		17,715,514		8/24/18		184,602		—
Euro		JPHQ		Sell		5,030,771		5,974,747		8/24/18		71,645		—
Japanese Yen		BOFA		Sell		1,085,075,000		9,843,468		8/24/18		2,319		—
Japanese Yen		SCNY		Sell		937,086,000		8,503,696		8/24/18		4,741		—
Japanese Yen		DBAB		Sell		371,821,000		3,518,700		8/27/18		145,715		—
Japanese Yen		JPHQ		Sell		1,130,199,000		10,349,429		8/27/18		96,795		—
Euro		DBAB		Sell		14,781,916		17,457,000		8/29/18		105,050		—
Euro		GSCO		Sell		3,469,000		4,096,924		8/29/18		24,792		—
Euro		SCNY		Sell		12,544,218		14,806,066		8/29/18		80,868		—
Japanese Yen		BZWS		Sell		1,920,010,000		17,704,920		8/29/18		284,948		—
Japanese Yen		DBAB		Sell		685,950,000		6,326,143		8/29/18		102,618		—
Japanese Yen		HSBK		Sell		1,339,587,000		12,241,777		8/29/18		87,898		—
South Korean Won		HSBK		Sell		35,277,000,000		32,747,273		8/30/18		1,057,455		—
Euro		BZWS		Sell		22,495,166		26,529,898		8/31/18		119,605		—
Euro		BOFA		Sell		2,694,506		3,157,153		9/04/18		—		(7,282	)
Euro		GSCO		Sell		34,088,050		40,160,836		9/04/18		127,740		—
Japanese Yen		HSBK		Sell		1,247,125,000		11,510,152		9/04/18		190,173		—
Australian Dollar		GSCO		Sell		127,700,540		96,633,553		9/05/18		2,095,502		—
Japanese Yen		JPHQ		Sell		848,300,000		7,794,690		9/05/18		94,223		—
South Korean Won		HSBK		Sell		42,561,000,000		39,637,718		9/05/18		1,393,932		—
Euro		SCNY		Sell		17,972,751		21,165,287		9/06/18		54,808		—
Euro		UBSW		Sell		6,231,299		7,351,313		9/06/18		32,138		—
Japanese Yen		HSBK		Sell		400,800,000		3,676,052		9/06/18		37,511		—
Euro		BOFA		Sell		34,170,296		40,111,827		9/07/18		—		(27,079	)
Euro		DBAB		Sell		8,136,104		9,566,431		9/07/18		9,174		—
Euro		GSCO		Sell		2,045,000		2,406,147		9/07/18		3,942		—
Japanese Yen		CITI		Sell		1,370,500,000		12,533,150		9/10/18		87,819		—
Euro		JPHQ		Sell		7,171,498		8,539,569		9/11/18		112,826		—


		Semiannual Report			TGB-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)


Forward Exchange Contracts (continued)
Currency	Counterparty	^a	Type	Quantity	Contract Amount	*	Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts (continued)
Japanese Yen	CITI		Sell	2,595,800,000	23,752,574		9/11/18	$	178,717	$	—
Japanese Yen	HSBK		Sell	1,026,200,000	9,257,472		9/11/18		—		(62,003	)
Japanese Yen	HSBK		Sell	1,026,200,000	9,409,284		9/11/18		89,809		—
Australian Dollar	JPHQ		Sell	6,989,428	5,347,227		9/12/18		172,770		—
Euro	DBAB		Sell	25,440,500	30,134,527		9/12/18		238,824		—
Japanese Yen	DBAB		Sell	595,700,000	5,481,229		9/12/18		70,959		—
Japanese Yen	HSBK		Sell	1,798,900,000	16,542,294		9/12/18		204,312		—
Japanese Yen	JPHQ		Sell	1,666,680,000	15,323,046		9/12/18		185,913		—
Australian Dollar	CITI		Sell	58,003,000	44,170,735		9/13/18		1,229,461		—
Japanese Yen	CITI		Sell	310,702,000	2,857,253		9/13/18		35,186		—
Australian Dollar	JPHQ		Sell	25,071,750	19,092,489		9/14/18		531,101		—
Indian Rupee	DBAB		Buy	258,123,000	3,779,253		9/14/18		—		(49,736	)
Japanese Yen	JPHQ		Sell	335,950,000	3,065,965		9/14/18		14,348		—
Japanese Yen	SCNY		Sell	366,681,000	3,347,707		9/14/18		16,944		—
Euro	JPHQ		Sell	5,131,690	6,089,289		9/17/18		56,614		—
Euro	BOFA		Sell	16,317,286	19,301,391		9/18/18		117,764		—
Euro	GSCO		Sell	1,789,884	2,096,827		9/18/18		—		(7,473	)
Japanese Yen	BOFA		Sell	903,250,850	8,217,871		9/18/18		10,734		—
Japanese Yen	GSCO		Sell	1,695,805,280	15,967,394		9/18/18		558,933		—
Japanese Yen	HSBK		Sell	1,035,240,000	9,878,244		9/18/18		471,825		—
Japanese Yen	JPHQ		Sell	702,800,000	6,406,096		9/18/18		20,300		—
Japanese Yen	MSCO		Sell	300,000,000	2,738,126		9/18/18		12,259		—
Japanese Yen	BZWS		Sell	981,707,504	8,930,865		9/19/18		10,197		—
Euro	GSCO		Sell	3,692,733	4,314,884		9/20/18		—		(27,190	)
Euro	UBSW		Sell	1,922,305	2,246,213		9/20/18		—		(14,116	)
Japanese Yen	CITI		Sell	1,372,892,008	12,509,267		9/20/18		33,029		—
Japanese Yen	BOFA		Sell	1,102,846,375	10,081,784		9/21/18		58,864		—
Japanese Yen	HSBK		Sell	1,106,730,400	10,125,251		9/21/18		67,031		—
Euro	DBAB		Sell	8,405,717	9,797,997		9/24/18		—		(88,838	)
Euro	HSBK		Sell	19,488,000	22,715,408		9/24/18		—		(206,452	)
Euro	JPHQ		Sell	14,818,028	17,285,229		9/25/18		—		(145,128	)
Japanese Yen	DBAB		Sell	2,181,107,000	19,924,590		9/25/18		96,347		—
Japanese Yen	HSBK		Sell	1,621,372,000	14,815,168		9/25/18		75,424		—
Japanese Yen	JPHQ		Sell	1,203,160,329	10,991,609		9/25/18		53,789		—
Euro	BOFA		Sell	33,910,662	39,842,655		9/28/18		—		(55,768	)
Euro	DBAB		Sell	14,776,109	17,274,306		9/28/18		—		(110,888	)
Euro	GSCO		Sell	3,469,000	4,051,896		9/28/18		—		(29,641	)
Japanese Yen	JPHQ		Sell	1,302,406,000	11,947,067		9/28/18		104,275		—
Brazilian Real	CITI		Buy	206,375,000	45,732,045	EUR	10/02/18		—		(1,094,270	)
Japanese Yen	DBAB		Sell	114,245,484	1,042,405		10/02/18		3,221		—
Japanese Yen	SCNY		Sell	415,980,000	3,976,560		10/05/18		191,826		—
Indian Rupee	JPHQ		Buy	82,107,000	1,238,463		10/09/18		—		(56,001	)
Japanese Yen	JPHQ		Sell	2,831,950,000	26,985,730		10/09/18		1,210,983		—
Japanese Yen	HSBK		Sell	2,816,800,000	26,657,203		10/11/18		1,016,034		—
Australian Dollar	JPHQ		Sell	25,071,750	18,978,813		10/15/18		413,809		—
Japanese Yen	BZWS		Sell	983,714,840	9,016,304		10/26/18		50,305		—
Indonesian Rupiah	JPHQ		Buy	1,721,000,000,000	120,518,207		10/29/18		—		(2,503,182	)
South Korean Won	HSBK		Sell	8,274,880,977	7,499,439		10/29/18		45,957		—
South Korean Won	HSBK		Sell	15,755,000,000	14,744,970		10/30/18		553,258		—


TGB-16		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)


Forward Exchange Contracts (continued)
Currency	Counterparty	^a	Type	Quantity	Contract Amount	*	Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts (continued)
South Korean Won	DBAB		Sell	13,920,000,000	13,038,591		11/19/18	$	488,874	$	—
South Korean Won	GSCO		Sell	44,346,000,000	41,277,051		12/07/18		1,265,081		—
South Korean Won	DBAB		Sell	13,919,000,000	13,105,786		12/11/18		544,929		—
Japanese Yen	CITI		Sell	1,782,638,500	16,331,632		12/18/18		11,137		—
Japanese Yen	DBAB		Sell	1,453,310,000	13,350,021		12/18/18		44,610		—
Japanese Yen	HSBK		Sell	1,455,540,000	13,357,561		12/18/18		31,733		—
Indian Rupee	CITI		Buy	69,318,000	1,000,693		12/19/18		—		(11,459	)
South Korean Won	CITI		Sell	4,215,000,000	3,921,113		12/20/18		115,896		—
Japanese Yen	BZWS		Sell	1,689,110,000	15,356,662		1/11/19		—		(137,695	)
Japanese Yen	GSCO		Sell	329,010,000	2,990,185		1/11/19		—		(27,854	)
Japanese Yen	JPHQ		Sell	2,831,950,000	25,730,614		1/11/19		—		(247,116	)
Japanese Yen	JPHQ		Sell	708,450,000	6,511,489		1/16/19		10,230		—
Japanese Yen	SCNY		Sell	707,660,000	6,540,296		1/22/19		43,187		—
Japanese Yen	BZWS		Sell	735,200,000	6,802,746		1/24/19		51,716		—
Japanese Yen	DBAB		Sell	858,140,000	7,912,844		1/24/19		32,908		—
Japanese Yen	JPHQ		Sell	7,105,349,700	65,733,367		1/24/19		487,950		—
Japanese Yen	CITI		Sell	913,412,000	8,480,447		1/25/19		92,304		—
Japanese Yen	JPHQ		Sell	1,407,000,000	13,052,069		1/25/19		131,156		—
Japanese Yen	HSBK		Sell	1,162,462,488	10,918,216		1/31/19		237,868		—
Japanese Yen	JPHQ		Sell	1,723,960,000	16,157,682		2/12/19		303,322		—
Japanese Yen	CITI		Sell	1,182,704,670	11,163,647		2/14/19		285,196		—
Japanese Yen	CITI		Sell	683,420,000	6,520,250		2/15/19		233,690		—
South Korean Won	HSBK		Sell	7,007,000,000	6,538,515		3/20/19		188,336		—

Total Forward Exchange Contracts								$	56,237,859	$	(14,121,404	)

Net unrealized appreciation (depreciation)								$	42,116,455

*In U.S. dollars unless otherwise indicated.

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

At June 30, 2018, the Fund had the following interest rate swap contracts outstanding. See Note 1(d).

Interest Rate Swap Contracts

Description

Payment
Frequency

Counter-
party

Maturity
Date

Notional

Amount

Value/
Unrealized
Appreciation
(Depreciation)

Centrally Cleared Swap Contracts

Receive Floating 3-month USD LIBOR
Pay Fixed 3.558%

Quarterly
Semi-Annual

3/04/21

3,240,000

(91,546

)

Receive Floating 3-month USD LIBOR
Pay Fixed 2.775%

Quarterly
Semi-Annual

10/04/23

13,090,000

58,582

Receive Floating 3-month USD LIBOR
Pay Fixed 2.795%

Quarterly
Semi-Annual

10/04/23

13,090,000

45,116

Receive Floating 3-month USD LIBOR
Pay Fixed 2.765%

Quarterly
Semi-Annual

10/07/23

13,090,000

66,907

Receive Floating 3-month USD LIBOR

Quarterly


		Semiannual Report			TGB-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)


Interest Rate Swap Contracts (continued)
Description	Payment Frequency		Counter- party		Maturity Date		Notional Amount		Value/ Unrealized Appreciation (Depreciation)
Centrally Cleared Swap Contracts (continued)
Pay Fixed 2.731%		Semi-Annual				7/07/24	$	34,000,000	$	33,286
Receive Floating 3-month USD LIBOR Pay Fixed 1.914%		Quarterly Semi-Annual				1/22/25		114,670,000		6,301,939
Receive Floating 3-month USD LIBOR Pay Fixed 1.970%		Quarterly Semi-Annual				1/23/25		143,340,000		7,375,667
Receive Floating 3-month USD LIBOR Pay Fixed 1.973%		Quarterly Semi-Annual				1/27/25		84,590,000		4,347,577
Receive Floating 3-month USD LIBOR Pay Fixed 1.937%		Quarterly Semi-Annual				1/29/25		21,150,000		1,132,118
Receive Floating 3-month USD LIBOR Pay Fixed 1.942%		Quarterly Semi-Annual				1/30/25		17,910,000		955,537
Receive Floating 3-month USD LIBOR Pay Fixed 1.817%		Quarterly Semi-Annual				2/03/25		28,210,000		1,734,912
Receive Floating 3-month USD LIBOR Pay Fixed 4.349%		Quarterly Semi-Annual				2/25/41		7,460,000		(1,888,731	)
Receive Floating 3-month USD LIBOR Pay Fixed 4.320%		Quarterly Semi-Annual				2/28/41		5,600,000		(1,375,122	)
Receive Floating 3-month USD LIBOR Pay Fixed 4.299%		Quarterly Semi-Annual				3/01/41		1,870,000		(452,871	)
Receive Floating 3-month USD LIBOR Pay Fixed 3.668%		Quarterly Semi-Annual				10/04/43		6,370,000		(868,332	)
Receive Floating 3-month USD LIBOR Pay Fixed 3.687%		Quarterly Semi-Annual				10/04/43		6,370,000		(890,518	)
Receive Floating 3-month USD LIBOR Pay Fixed 3.675%		Quarterly Semi-Annual				10/07/43		6,370,000		(875,400	)
Receive Floating 3-month USD LIBOR Pay Fixed 2.378%		Quarterly Semi-Annual				11/18/46		122,400,000		13,818,881
Receive Floating 3-month USD LIBOR Pay Fixed 2.537%		Quarterly Semi-Annual				4/13/47		72,700,000		5,892,801
Receive Floating 3-month USD LIBOR Pay Fixed 2.587%		Quarterly Semi-Annual				7/27/47		36,700,000		2,378,306
Receive Floating 3-month USD LIBOR Pay Fixed 2.980%		Quarterly Semi-Annual				2/20/48		15,638,000		(304,472	)
Receive Floating 3-month USD LIBOR Pay Fixed 3.002%		Quarterly Semi-Annual				2/22/48		15,638,000		(353,897	)
Receive Floating 3-month USD LIBOR Pay Fixed 3.019%		Quarterly Semi-Annual				2/23/48		15,638,000		(409,729	)

Total Centrally Cleared Swap Contracts									$	36,631,011

OTC Swap Contracts
Receive Floating 3-month USD LIBOR Pay Fixed 3.523%		Quarterly Semi-Annual		DBAB		3/28/21	$	14,630,000	$	(393,535	)
Receive Floating 3-month USD LIBOR		Quarterly


TGB-18		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)


Interest Rate Swap Contracts (continued)


Description	Payment Frequency		Counter- party		Maturity Date		Notional Amount		Value/ Unrealized Appreciation (Depreciation)
OTC Swap Contracts (continued)
Pay Fixed 4.347%		Semi-Annual		CITI		2/25/41	$	7,460,000	$	(1,867,404	)

Total OTC Swap Contracts									$	(2,260,939	)

Total Interest Rate Swap Contracts									$	34,370,072

See Note 9 regarding other derivative information.

See Abbreviations on page TGB-33.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			TGB-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2018 (unaudited)


	Templeton Global Bond VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	2,094,589,992
Cost - Non-controlled affiliates (Note 3e)		805,945,058
Cost - Unaffiliated repurchase agreements		151,947,582

Value - Unaffiliated issuers	$	1,926,600,300
Value - Non-controlled affiliates (Note 3e)		805,945,058
Value - Unaffiliated repurchase agreements		151,947,582
Cash		1,044,673
Restricted cash for OTC derivative contracts (Note 1e)		28,928,000
Foreign currency, at value (cost $11,669,030)		11,420,607
Receivables:
Capital shares sold		597,963
Interest		30,723,814
Deposits with brokers for:
Centrally cleared swap contracts		51,134,246
Variation margin on centrally cleared swap contracts		455,423
Unrealized appreciation on OTC forward exchange contracts		56,237,859
Other assets		3,346

Total assets		3,065,038,871

Liabilities:
Payables:
Investment securities purchased		353,160
Capital shares redeemed		538,672
Management fees		930,999
Distribution fees		1,179,251
Deposits from brokers for:
OTC derivative contracts		28,928,000
Unrealized depreciation on OTC forward exchange contracts		14,121,404
Unrealized depreciation on OTC swap contracts		2,260,939
Deferred tax		2,205,085
Accrued expenses and other liabilities		1,276,433

Total liabilities		51,793,943

Net assets, at value	$	3,013,244,928

Net assets consist of:
Paid-in capital	$	3,072,086,718
Undistributed net investment income		63,261,797
Net unrealized appreciation (depreciation)		(96,287,489	)
Accumulated net realized gain (loss)		(25,816,098	)

Net assets, at value	$	3,013,244,928


TGB-20		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2018 (unaudited)


	Templeton Global Bond VIP Fund

Class 1:
Net assets, at value	$	275,800,139

Shares outstanding		16,164,681

Net asset value and maximum offering price per share	$	17.06


Class 2:
Net assets, at value	$	2,642,930,839

Shares outstanding		161,269,749

Net asset value and maximum offering price per share	$	16.39


Class 4:
Net assets, at value	$	94,513,950

Shares outstanding		5,644,672

Net asset value and maximum offering price per share	$	16.74


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			TGB-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2018 (unaudited)


	Templeton Global Bond VIP Fund
Investment income:
Dividends:
Non-controlled affiliates (Note 3e)	$	4,499,234
Interest: (net of foreign taxes)~
Unaffiliated issuers		76,563,073

Total investment income		81,062,307

Expenses:
Management fees (Note 3a)		7,073,129
Distribution fees: (Note 3c)
Class 2		3,382,076
Class 4		171,030
Custodian fees (Note 4)		800,826
Reports to shareholders		151,761
Professional fees		65,388
Trustees’ fees and expenses		7,824
Other		416,737

Total expenses		12,068,771
Expense reductions (Note 4)		(209,316	)
Expenses waived/paid by affiliates (Note 3e)		(1,324,573	)

Net expenses		10,534,882

Net investment income		70,527,425

Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:^#
Unaffiliated issuers		12,360,018
Foreign currency transactions		(929,683	)
Forward exchange contracts		(31,380,623	)
Swap contracts		(2,591,540	)

Net realized gain (loss)		(22,541,828	)

Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(185,584,551	)
Translation of other assets and liabilities denominated in foreign currencies		(2,874,542	)
Forward exchange contracts		79,116,706
Swap contracts		39,130,242
Change in deferred taxes on unrealized appreciation		1,044,419

Net change in unrealized appreciation (depreciation)		(69,167,726	)

Net realized and unrealized gain (loss)		(91,709,554	)

Net increase (decrease) in net assets resulting from operations	$	(21,182,129	)

^~Foreign taxes withheld on interest	$	2,010,809
^#Net of foreign taxes	$	42,741


TGB-22		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets


	Templeton Global Bond VIP Fund
	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	70,527,425		$	144,457,894
Net realized gain (loss)		(22,541,828	)		(84,441,214	)
Net change in unrealized appreciation (depreciation)		(69,167,726	)		1,318,770

Net increase (decrease) in net assets resulting from operations		(21,182,129	)		61,335,450

Distributions to shareholders from:
Net realized gains:
Class 1		—			(806,829	)
Class 2		—			(8,999,053	)
Class 4		—			(307,109	)

Total distributions to shareholders		—			(10,112,991	)

Capital share transactions: (Note 2)
Class 1		(9,086,480	)		40,791,975
Class 2		(68,299,542	)		(128,337,512	)
Class 4		(3,704,195	)		715,746

Total capital share transactions		(81,090,217	)		(86,829,791	)

Net increase (decrease) in net assets		(102,272,346	)		(35,607,332	)
Net assets:
Beginning of period		3,115,517,274			3,151,124,606

End of period	$	3,013,244,928		$	3,115,517,274

Undistributed net investment income included in net assets:
End of period	$	63,261,797		$	—

Accumulated net investment loss included in net assets:
End of period	$	—		$	(7,265,628	)


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			TGB-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Templeton Global Bond VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eighteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Templeton Global Bond VIP Fund (Fund) is included in this report. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers three classes of shares: Class 1, Class 2 and Class 4. Each class of shares may differ by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Debt securities generally trade in the over-the-counter (OTC) market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics

such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the date that the values of the foreign debt securities are determined.

Investments in open-end mutual funds are valued at the closing NAV. Investments in repurchase agreements are valued at cost, which approximates fair value.

Derivative financial instruments listed on an exchange are valued at the official closing price of the day. Certain derivative financial instruments are centrally cleared or trade in the OTC market. The Fund’s pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to determine the fair value of those instruments. The Fund’s net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.


TGB-24		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

b. Foreign Currency Translation

c. Joint Repurchase Agreement

market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Fund, certain MRAs may permit the non-defaulting party to net and close-out all transactions, if any, traded under such agreements. The Fund may sell securities it holds as collateral and apply the proceeds towards the repurchase price and any other amounts owed by the seller to the Fund in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls below the repurchase price owed by the seller. The joint repurchase agreement held by the Fund at period end, as indicated in the Statement of Investments, had been entered into on June 29, 2018.

d. Derivative Financial Instruments

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counter-parties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset


		Semiannual Report			TGB-25

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

1. Organization and Significant Accounting

Policies (continued)

d. Derivative Financial Instruments (continued)

levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement.

The Fund entered into interest rate swap contracts primarily to manage interest rate risk. An interest rate swap is an agreement between the Fund and a counterparty to exchange cash flows based on the difference between two interest rates, applied to a notional amount. These agreements may be privately negotiated in the over-the-counter market (OTC interest rate swaps) or may be executed on a registered exchange (centrally cleared interest rate swaps). For centrally cleared interest rate swaps, required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable in the Statement of Assets and Liabilities. Over the term of the contract, contractually required payments to be paid and to be received are accrued daily and recorded as unrealized depreciation and appreciation until the payments are made, at which time they are realized.

The Fund invests in value recovery instruments (VRI) primarily to gain exposure to economic growth. Periodic payments from VRI are dependent on established benchmarks for underlying variables. VRI has a notional amount, which is used to calculate amounts of payments to holders. Payments are recorded upon receipt as realized gains in the Statement of Operations. The risks of investing in VRI include growth risk, liquidity, and the potential loss of investment.

See Note 9 regarding other derivative information.

e. Restricted Cash

At June 30, 2018, the Fund held restricted cash in connection with investments in certain derivative securities. Restricted cash is held in a segregated account with the Fund’s counterparty broker and is reflected in the Statement of Assets and Liabilities.

f. Income and Deferred Taxes


TGB-26		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

which the Fund invests. When a capital gain tax is determined to apply, the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

g. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income is recorded on the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

h. Accounting Estimates

i. Guarantees and Indemnifications


		Semiannual Report			TGB-27

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 1 Shares:
Shares sold		1,962,316		$	34,030,349			4,567,479		$	79,103,441
Shares issued in reinvestment of distributions		—			—			46,290			806,829
Shares redeemed		(2,487,886	)		(43,116,829	)		(2,272,230	)		(39,118,295	)

Net increase (decrease)		(525,570	)	$	(9,086,480	)		2,341,539		$	40,791,975


Class 2 Shares:
Shares sold		6,063,848		$	101,036,285			10,419,624		$	173,987,516
Shares issued in reinvestment of distributions		—			—			535,977			8,999,053
Shares redeemed		(10,167,314	)		(169,335,827	)		(18,675,809	)		(311,324,081	)

Net increase (decrease)		(4,103,466	)	$	(68,299,542	)		(7,720,208	)	$	(128,337,512	)


Class 4 Shares:
Shares sold		347,150		$	5,913,449			1,027,651		$	17,546,285
Shares issued in reinvestment of distributions		—			—			17,886			307,109
Shares redeemed		(565,158	)		(9,617,644	)		(1,005,305	)		(17,137,648	)

Net increase (decrease)		(218,008	)	$	(3,704,195	)		40,232		$	715,746

3. Transactions with Affiliates


Subsidiary		Affiliation
Franklin Advisers, Inc. (Advisers)		Investment manager
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent

a. Management Fees

The Fund pays an investment management fee to Advisers based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
0.625%		Up to and including $100 million
0.500%		Over $100 million, up to and including $250 million
0.450%		Over $250 million, up to and including $7.5 billion
0.440%		Over $7.5 billion, up to and including $10 billion
0.430%		Over $10 billion, up to and including $12.5 billion
0.420%		Over $12.5 billion, up to and including $15 billion
0.400%		In excess of $15 billion


TGB-28		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

3. Transactions with Affiliates (continued)

For the period ended June 30, 2018, the annualized gross effective investment management fee rate was 0.458% of the Fund’s average daily net assets.

b. Administrative Fees

c. Distribution Fees

The Board has adopted distribution plans for Class 2 and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.25% and 0.35% per year of its average daily net assets of Class 2 and Class 4, respectively. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

Investor Services, under terms of an agreement, performs shareholder servicing for the Fund and is not paid by the Fund for the services.

e. Investments in Affiliated Management Investment Companies


	Number of Shares Held at Beginning of Period		Gross Additions		Gross Reductions			Number of Shares Held at End of Period		Value at End of Period		Dividend Income		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 1.51%		664,514,279		392,495,000		(251,064,221	)		805,945,058	$	805,945,058	$	4,499,234	$	—	$	—

4. Expense Offset Arrangement

5. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains, if any. At December 31, 2017, the capital loss carryforwards were as follows:


Capital loss carryforwards not subject to expiration:
Short term	$	2,981,110
Long term		294,319

Total capital loss carryforwards	$	3,275,429


		Semiannual Report		TGB-29

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

5. Income Taxes (continued)

At June 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


Cost of investments.	$	3,070,645,157

Unrealized appreciation	$	178,895,528
Unrealized depreciation		(288,561,218	)

Net unrealized appreciation (depreciation)	$	(109,665,690	)

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2018, aggregated $233,730,514 and $264,006,033, respectively.

7. Credit Risk

At June 30, 2018, the Fund had 15.7% of its portfolio invested in high yield or other securities rated below investment grade and unrated securities, if any. These securities may be more sensitive to economic conditions causing greater price volatility and are potentially subject to a greater risk of loss due to default than higher rated securities.

8. Concentration of Risk

9. Other Derivative Information

At June 30, 2018, the Fund’s investments in derivative contracts are reflected in the Statement of Assets and Liabilities as follows:

Asset Derivatives

Liability Derivatives

Derivative Contracts

Not Accounted for

as Hedging Instruments

Statement of Assets and
Liabilities Location

Fair Value

Statement of Assets and
Liabilities Location

Fair Value

Interest rate contracts

Variation margin on centrally cleared swap contracts

$ 44,141,629

Variation margin on centrally cleared swap contracts

7,510,618

Unrealized appreciation on OTC swap contracts

—

Unrealized depreciation on OTC swap contracts

2,260,939

Foreign exchange contracts

Unrealized appreciation on OTC forward exchange contracts

56,237,859

Unrealized depreciation on OTC forward exchange contracts

14,121,404

Value recovery instruments

Investments in securities, at value

18,845,936

Totals

$119,225,424

23,892,961

^aThis amount reflects the cumulative appreciation (depreciation) of centrally cleared swap contracts as reported in the Statement of Investments. Only the variation margin receivable/payable at period end is separately reported within the Statement of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.

^bVRI are included in investments in securities, at value in the Statement of Assets and Liabilities.


TGB-30		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

9. Other Derivative Information (continued)

For the period ended June 30, 2018, the effect of derivative contracts in the Fund’s Statement of Operations was as follows:


Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Location	Net Realized Gain (Loss) for the Period			Statement of Operations Location	Net Change in Unrealized Appreciation (Depreciation) for the Period
	Net realized gain (loss) from:				Net change in unrealized appreciation (depreciation) on:
Interest rate contracts	Swap contracts	$	(2,591,540	)	Swap contracts	$	39,130,242
Foreign exchange contracts	Forward exchange contracts		(31,380,623	)	Forward exchange contracts		79,116,706
Value recovery instruments	Investments		59,466	^a	Investments		2,214,879	^a

Totals		$	(33,912,697	)		$	120,461,827

^aVRI are included in net realized gain (loss) from investments and net change in unrealized appreciation (depreciation) on investments in the Statement of Operations.

For the period ended June 30, 2018, the average month end notional amount of swap contracts represented $807,820,000. The average month end contract value and fair value of forward exchange contracts and VRI, was $3,340,565,128 and $19,811,075, respectively.

See Note 1(d) regarding derivative financial instruments.

At June 30, 2018, the Fund’s OTC derivative assets and liabilities are as follows:


	Gross Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
	Assets^a		Liabilities^a
Derivatives
Forward exchange contracts	$	56,237,859	$	14,121,404
Swap contracts		—		2,260,939

Total	$	56,237,859	$	16,382,343

^aAbsent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

At June 30, 2018, the Fund’s OTC derivative assets, which may be offset against the Fund’s OTC derivative liabilities and collateral received from the counterparty, are as follows:


			Amounts Not Offset in the Statement of Assets and Liabilities
	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Received^a,b			Cash Collateral Received^b			Net Amount (Not less than zero)
Counterparty
BOFA	$	2,852,144	$	(137,729	)	$	—		$	(2,714,415	)	$	—
BZWS		3,179,859		(137,695	)		(3,042,164	)		—			—
CITI		8,735,248		(7,356,315	)		—			(1,378,933	)		—
DBAB		7,312,388		(1,991,498	)		—			(5,320,890	)		—
GSCO		5,721,986		(92,158	)		—			(5,629,828	)		—
HSBK		13,507,894		(2,629,286	)		(7,873,655	)		—			3,004,953
JPHQ		12,611,864		(3,889,948	)		(8,721,916	)		—			—
MSCO		181,921		(114,268	)		—			(67,653	)		—
SCNY		1,404,850		(19,330	)		—			(1,385,520	)		—
UBSW		729,705		(14,116	)		(715,589	)		—			—

Total	$	56,237,859	$	(16,382,343	)	$	(20,353,324	)	$	(16,497,239	)	$	3,004,953


		Semiannual Report		TGB-31

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

9. Other Derivative Information (continued)

At June 30, 2018, the Fund’s OTC derivative liabilities, which may be offset against the Fund’s OTC derivative assets and collateral pledged to the counterparty, are as follows:


			Amounts Not Offset in the Statement of Assets and Liabilities
	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Pledged		Cash Collateral Pledged		Net Amount (Not less than zero)
Counterparty
BOFA	$	137,729	$	(137,729	)	$	—	$	—	$	—
BZWS		137,695		(137,695	)		—		—		—
CITI		7,356,315		(7,356,315	)		—		—		—
DBAB		1,991,498		(1,991,498	)		—		—		—
GSCO		92,158		(92,158	)		—		—		—
HSBK		2,629,286		(2,629,286	)		—		—		—
JPHQ		3,889,948		(3,889,948	)		—		—		—
MSCO		114,268		(114,268	)		—		—		—
SCNY		19,330		(19,330	)		—		—		—
UBSW		14,116		(14,116	)		—		—		—

Total	$	16,382,343	$	(16,382,343	)	$	—	$	—	$	—

^aAt June 30, 2018, the Fund received United Kingdom Treasury Bonds and U.S. Treasury Bills, Bonds and Notes as collateral for derivatives.

^bIn some instances, the collateral amounts disclosed in the table above were adjusted due to the requirement to limit collateral amounts to avoid the effect of overcollateralization. Actual collateral received and/or pledged may be more than the amounts disclosed herein.

See Abbreviations on page TGB-33.

10. Credit Facility

11. Fair Value Measurements

•

Level 1 – quoted prices in active markets for identical financial instruments

•

Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)


TGB-32		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

•

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2018, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:


	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:^a
Foreign Government and Agency Securities	$	—	$	1,681,754,667	$	—	$	1,681,754,667
Short Term Investments		1,033,983,187		168,755,086		—		1,202,738,273

Total Investments in Securities	$	1,033,983,187	$	1,850,509,753	$	—	$	2,884,492,940

Other Financial Instruments:
Forward Exchange Contracts	$	—	$	56,237,859	$	—	$	56,237,859
Swap Contracts		—		44,141,629		—		44,141,629

Total Other Financial Instruments	$	—	$	100,379,488	$	—	$	100,379,488


Liabilities:
Other Financial Instruments:
Forward Exchange Contracts	$	—	$	14,121,404	$	—	$	14,121,404
Swap Contracts		—		9,771,557		—		9,771,557

Total Other Financial Instruments	$	—	$	23,892,961	$	—	$	23,892,961

^aFor detailed categories, see the accompanying Statement of Investments.

12. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations


Counterparty/Exchange		Currency		Selected Portfolio

BOFA	Bank of America Corp.	ARS	Argentine Peso	BADLAR	Argentina Deposit Rates Badlar Private Banks ARS

BZWS	Barclays Bank PLC	BRL	Brazilian Real	FRN	Floating Rate Note

CITI	Citigroup, Inc.	COP	Colombian Peso	GDP	Gross Domestic Product

DBAB	Deutsche Bank AG	EUR	Euro	LIBOR	London InterBank Offered Rate

GSCO	The Goldman Sachs Group, Inc.	GHS	Ghanaian Cedi	VRI	Value Recovery Instrument

HSBK	HSBC Bank PLC	IDR	Indonesian Rupiah

JPHQ	JP Morgan Chase & Co.	INR	Indian Rupee

MSCO	Morgan Stanley	KRW	South Korean Won

SCNY	Standard Chartered Bank	MXN	Mexican Peso

UBSW	UBS AG	PEN	Peruvian Nuevo Sol

		PHP	Philippine Peso

		USD	United States Dollar


		Semiannual Report		TGB-33

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Tax Information (unaudited)

Templeton Global Bond VIP Fund

At December 31, 2017, more than 50% of the Fund’s total assets were invested in securities of foreign issuers. In most instances, foreign taxes were withheld from income paid to the Fund on these investments. As shown in the table below, the Fund hereby reports to shareholders the foreign source income and foreign taxes paid, pursuant to Section 853 of the Internal Revenue Code (Code). This written statement will allow shareholders of record on June 14, 2018, to treat their proportionate share of foreign taxes paid by the Funds as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.

The following table provides a detailed analysis of foreign tax paid, and foreign source income as reported by the Fund, to Class 1, Class 2, and Class 4 shareholders of record.


Class	Foreign Tax Paid Per Share	Foreign Source Income Per Share
Class 1	$0.0402	$0.9616
Class 2	$0.0402	$0.9177
Class 4	$0.0402	$0.8998

Foreign Source Income Per Share (Column 2) is the amount per share of income dividends attributable to foreign securities held by the Fund, plus any foreign taxes withheld on these dividends.


TGB-34		Semiannual Report

Templeton Growth VIP Fund

This semiannual report for Templeton Growth VIP Fund covers the period ended June 30, 2018.

Class 1 Performance Summary as of June 30, 2018

The Fund’s Class 1 Shares had a -2.39% total return for the six-month period ended June 30, 2018.


		Semiannual Report			TG-1

TEMPLETON GROWTH VIP FUND

Fund Goal and Main Investments

The Fund seeks long-term capital growth. Under normal market conditions, the Fund invests predominantly in equity securities (primarily common stocks) of companies located anywhere in the world, including developing markets.

Fund Risks

All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors. Because the Fund may invest its assets in companies in a specific region, including Europe, it is subject to greater risks of adverse developments in that region and/or the surrounding regions than a fund that is more broadly diversified geographically. Political, social or economic disruptions in the region, even in countries in which the fund is not invested, may adversely affect the value of securities held by the Fund. Current political and financial uncertainty surrounding the European Union (EU) and the financial instability of some countries in the EU may increase market volatility and the economic risk of investing in companies in Europe. In addition, smaller company stocks have historically experienced more price volatility than larger company stocks, especially over the short term. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. For comparison, the Fund’s benchmark, the MSCI All Country World Index (ACWI), had a -0.13% total return for the period under review.¹

Economic and Market Overview

Geographic Composition

Based on Total Net Assets as of 6/30/18

LOGO

commodities, encouraging corporate earnings reports and investor optimism about global economic growth. However, global stocks had a -0.13% total return for the six-month period, as measured by the MSCI ACWI, largely due to an overall decline in emerging market stocks.¹

1. Source: Morningstar.

One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

2. Source: US Bureau of Labor Statistics.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).


TG-2		Semiannual Report

TEMPLETON GROWTH VIP FUND

December 2017, as reported at the beginning of the period, to 2.9% at period-end.² The US Federal Reserve raised its target range for the federal funds rate in March and June 2018 and continued reducing its balance sheet as part of its ongoing plan to normalize monetary policy.

Investment Strategy

Our investment philosophy is bottom up, value oriented and long term. When choosing equity investments for the Fund, we focus on the market price of a company’s securities relative to our evaluation of the company’s potential long-term earnings, asset value and cash flow. We also consider a company’s

price/earnings ratio, price/cash flow ratio, profit margins and liquidation value.

Manager’s Discussion

Global equities modestly retreated during the first half of 2018 amid concerns about escalating trade tensions and the impact of a stronger US dollar and tighter monetary policy on emerging markets. The performance trends dominant during this market cycle remained largely intact, with a few exceptions. Information technology (IT) and other growth-oriented sectors maintained their long-running leadership, while energy extended more recent gains as supply concerns and solid demand supported the price of crude. Among new developments during the period, health care stocks rebounded while financials underperformance deepened.

The Fund’s stock selection and overweighted allocation in financials detracted significantly from the Fund’s performance relative to its benchmark, as the sector was led lower by a mix of European and Asian lenders and insurers.⁴ European lenders were negatively impacted by flagging regional growth and Italian political turmoil. We believe investor concerns about Italy are overblown. Italy certainly has its challenges, including high public debt, rigid labor markets, low productivity, high unit labor costs, a fragmented banking system, inefficient tax base, political fragility and so on. But, by any objective assessment, we believe the country is far better off in the EU than it would be outside of it. Were Italy to leave, we think its banks would be insolvent, its government would default on its obligations, and the purchasing power of household savings would be vastly diminished once redenominated into lira. In all likelihood, the recent Italian crisis has done little more than postpone ECB interest rate hikes a few months and take some air out of the euro—not necessarily adverse developments for an export-oriented trading bloc accustomed to expansive monetary policy. The largest one-day spike in Italian bond yields since 1993 may also be a helpful warning—much like the one experienced by Greece in 2015—that financial markets remain vigilant. After reducing exposure to European financials amid last year’s strength, we have viewed more recent volatility as a selective buying opportunity. Meanwhile, shares of South Korean lender KB Financial Group led the Fund’s Asian bank holdings lower as general concerns about regulatory and geopolitical risks in South Korea outweighed continued fundamental strength.

3. Please see Index Descriptions following the Fund Summaries.

4. The financials sector comprises banks, capital markets, consumer finance, diversified financial services and insurance in the SOI.


		Semiannual Report			TG-3

TEMPLETON GROWTH VIP FUND

Stock selection and an underweighted allocation in IT also detracted, though there were no IT holdings among the Fund’s biggest single-stock laggards.⁵ We remain skeptical about the sustainability of IT’s outperformance given that recent strength has been driven primarily by valuation multiples expansion, not earnings growth. Indeed, the price/sales ratio for the S&P 500 IT Index has almost doubled over the past five years, while the earnings growth trend has stagnated. We cannot explain why flat growth is being rewarded with an expanding multiple, and we continue to underweight the sector amid what appears to be the biggest divergence between IT valuations and fundamentals since the late 1990s.

The only other sectors that detracted from relative performance during the first half of 2018 were health care and telecommunication services due to stock selection for health care (that offset the positive effect of an overweighted allocation) and an overweighting in telecommunication services.⁶ The health care sector delivered the Fund’s biggest detractor during the period: Swedish medical devices firm Getinge (though it bears mentioning that Israel’s Teva Pharmaceutical Industries, another health care holding, was the Fund’s biggest individual contributor). Shares of Getinge have come under pressure in recent years as regulatory issues and management turnover transformed what was once viewed as a quality growth stock into something now viewed as a complex restructuring story. Yet, at this point, Getinge appears to be nearing the bottom of its financial performance. Although challenges persist, we believe the most vexing aspects of regulatory compliance and restructuring progress should be over. The stock simply remains too cheap for a market leader with a solid track record and strong position in businesses with high barriers to entry, in our view. More generally, we believe we have assembled a balanced portfolio of health care stocks that discounts well-known macroeconomic headwinds and offers unique catalysts for sustainable outperformance. From the telecommunications sector, shares of Singapore Telecommunications (Singtel) declined after reporting a drop in net income. Although currency fluctuations and a new 4G mobile entry in Australia and Singapore may pressure profits in the near term, we believe consolidation in the promising Indian market should help earnings recover over our investment horizon. Recently trading at what we consider to be a relatively cheap valuation multiple and featuring a strong balance sheet, attractive dividend yield, and compelling emerging market growth


Top 10 Holdings
6/30/18
Company *Sector/Industry, Country*	% of Total Net Assets
Royal Dutch Shell PLC Oil, Gas & Consumable Fuels, U.K.		2.6%
Teva Pharmaceutical Industries Ltd. Pharmaceuticals, Israel		2.4%
BP PLC Oil, Gas & Consumable Fuels, U.K.		2.4%
SES SA Media, Luxembourg		2.3%
Citigroup Inc. Banks, U.S.		2.1%
Eni SpA Oil, Gas & Consumable Fuels, Italy		2.0%
Allergan PLC Pharmaceuticals, U.S.		2.0%
Oracle Corp. Software, U.S.		1.8%
Samsung Electronics Co. Ltd. Technology Hardware, Storage & Peripherals, South Korea		1.8%
HSBC Holdings PLC Banks, U.K.		1.8%

prospects, we believe Singtel remains significantly undervalued relative to its long-term fundamentals.

Turning to contributors, we were encouraged by the outperformance of the Fund’s energy holdings, which benefited from both stock selection and an overweighted allocation.⁷ Oil prices surged to a multi-year high during the period due to a combination of geopolitical risks to supply, coordinated supply management by the Organization of the Petroleum Exporting Counties along with other oil-producing countries, and stronger-than-expected global demand. US exploration and production firm ConocoPhillips advanced as management maintained capital discipline, returning excess cash flows from higher oil prices to shareholders through dividends and share buybacks. Italy-based oil major Eni gained after reporting increased production and stronger earnings. UK-based integrated energy firm BP also contributed. We believe BP should be able to generate substantial free cash flow that will likely be returned to shareholders through improved dividends and share repurchases. In the integrated oil segment more generally, production growth is finally coming through as

5. The IT sector comprises communications equipment; internet software and services; and technology hardware, storage and peripherals in the SOI.

6. The health care sector comprises biotechnology, health care equipment and supplies, health care providers and services, life sciences tools and services, and pharmaceuticals in the SOI. The telecommunication services sector comprises diversified telecommunication services and wireless telecommunication services in the SOI.

7. The energy sector comprises energy equipment and services and oil, gas and consumable fuels in the SOI.


TG-4		Semiannual Report

TEMPLETON GROWTH VIP FUND

operating and capital expenditures come down and oil prices normalize higher. As a result, the integrated oil segment looks set to generate more free cash flow this year than it did when oil traded at US$100 per barrel, in our view, and much of that cash could be returned to shareholders in the form of dividends and share buybacks. As the commodity cycle matures, we have begun to take profits on higher volatility oil services holdings and focus instead on more stable and cash-generative integrated energy firms.

Stock selection in consumer discretionary also boosted relative performance.⁸ Shares of Luxembourg-based satellite specialist SES bounced back during the period after a strong earnings report helped improve recently lackluster sentiment. We continue to believe that SES’s new management team is executing a sensible turnaround plan and the company should benefit over our long-term horizon from the structural growth in global data demand, given the high barriers to entry associated with its difficult-to-replicate orbital slots. US media group Twenty-First Century Fox also delivered solid returns after a bidding war broke out for the firm’s assets.

From a regional standpoint, stock selection and an underweighted position in the resilient US market detracted from the Fund’s relative performance, as did stock selection and a slight overweighting in Asia. Stock selection in Europe contributed to relative results, but this was offset by the negative effect of an overweighting in the region. In the Middle East and Africa region, an overweighting in Israel contributed.

It is important to recognize the effect of currency movements on the Fund’s performance. In general, if the value of the US dollar goes up compared with a foreign currency, an investment traded in that foreign currency will go down in value because it will be worth fewer US dollars. This can have a negative effect on Fund performance. Conversely, when the US dollar weakens in relation to a foreign currency, an investment traded in that foreign currency will increase in value, which can contribute to Fund performance. For the six months ended June 30, 2018, the US dollar rose in value relative to most currencies. As a result, the Fund’s performance was negatively affected by the portfolio’s substantial investment in securities with non-US currency exposure.

At the end of the first half of 2018, we remained optimistic about the prospects for value, and we maintained the belief that companies whose fundamentals are underappreciated by a short-term market are well positioned for outperformance over

time. Global valuation spreads (the gap between the market’s cheapest and most expensive stocks) at the end of the period were the widest they have been in at least 30 years. Put another way, value globally has only been this cheap a very small percentage of the time in the past three decades. Though it may not feel like it, we believe this could be a uniquely great opportunity for value investors. Yet, despite our conviction on value’s long-term prospects, we are not sitting idly by waiting for the cycle to turn. We have worked hard to continuously refine and improve our process, with recent initiatives including improved risk management strategies and the integration of environmental, social and governance analysis into our investment framework. The goal in these efforts is to ensure that our investment process remains true to Templeton’s time-tested fundamental value approach, while also evolving to best address client goals and market conditions.

Thank you for your participation in Templeton Growth VIP Fund. We look forward to serving your future investment needs.

8. The consumer discretionary sector comprises automobiles, household durables, leisure products, media and specialty retail in the SOI.


		Semiannual Report		TG-5

TEMPLETON GROWTH VIP FUND

Class 1 Fund Expenses

Actual Fund Expenses

The table below provides information about the actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of ongoing Fund expenses but does not include the effect of ongoing Contract expenses, is used to calculate the “Ending Account Value.” You can estimate the Fund-level expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number under the headings “Actual” and “Fund-Level Expenses Paid During Period” (if Fund-Level Expenses Paid During Period were $7.50, then 8.6 × $7.50 = $64.50). In this illustration, the estimated expenses paid this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Actual
(actual return after expenses)

Hypothetical
(5% annual return before expenses)

Share Class

Beginning Account
Value 1/1/18

Ending Account
Value 6/30/18

Fund-Level
Expenses Paid
During Period
1/1/18–6/30/18

^1,2

Ending Account
Value 6/30/18

Fund-Level
Expenses Paid
During Period
1/1/18–6/30/18

^1,2

Net
Annualized
Expense
Ratio

Class 1

$1,000

$976.10

$4.02

$1,020.73

$4.11

0.82%

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above — in the far right column — multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include any ongoing expenses of the Contract for which the Fund is an investment option or acquired fund fees and expenses.


TG-6		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Templeton Growth VIP Fund


	Six Months Ended June 30, 2018			Year Ended December 31,
	(unaudited)			2017			2016			2015			2014			2013
Class 1
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$16.24			$13.93			$13.54			$14.85			$15.47			$12.16


Income from investment operations^a:

Net investment income^b		0.20			0.29			0.26			0.28			0.38	^c		0.22

Net realized and unrealized gains (losses)		(0.56	)		2.30			0.96			(1.17	)		(0.75	)		3.49

Total from investment operations		(0.36	)		2.59			1.22			(0.89	)		(0.37	)		3.71


Less distributions from:

Net investment income		(0.35	)		(0.28	)		(0.31	)		(0.42	)		(0.25	)		(0.40	)

Net realized gains		(1.31	)		—			(0.52	)		—			—			—

Total distributions		(1.66	)		(0.28	)		(0.83	)		(0.42	)		(0.25	)		(0.40	)

Net asset value, end of period		$14.22			$16.24			$13.93			$13.54			$14.85			$15.47


Total return^d		(2.39)%			18.77%			9.90%			(6.24)%			(2.53)%			31.05%

Ratios to average net assets^e

Expenses		0.82%	^f		0.82%	^f,g		0.82%	^f		0.80%	^f		0.78%			0.78%	^g

Net investment income		2.51%			1.94%			2.01%			1.96%			2.46%	^c		1.62%

Supplemental data

Net assets, end of period (000’s)		$423,028			$466,207			$453,997			$468,548			$572,860			$588,409

Portfolio turnover rate		15.61%			26.46%			22.88%			20.92%			17.46%			11.60%

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.09 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.88%.

^eRatios are annualized for periods less than one year.

^fBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^gBenefit of expense reduction rounds to less than 0.01%.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			TG-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Growth VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 2
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$15.97			$13.70			$13.32			$14.61			$15.23			$11.97


Income from investment operations^a:

Net investment income^b		0.18			0.25			0.23			0.25			0.34	^c		0.19

Net realized and unrealized gains (losses)		(0.55	)		2.26			0.94			(1.16	)		(0.75	)		3.44


Total from investment operations		(0.37	)		2.51			1.17			(0.91	)		(0.41	)		3.63


Less distributions from:

Net investment income		(0.31	)		(0.24	)		(0.27	)		(0.38	)		(0.21	)		(0.37	)

Net realized gains		(1.31	)		—			(0.52	)		—			—			—


Total distributions		(1.62	)		(0.24	)		(0.79	)		(0.38	)		(0.21	)		(0.37	)


Net asset value, end of period		$13.98			$15.97			$13.70			$13.32			$14.61			$15.23


Total return^d		(2.51)%			18.50%			9.62%			(6.49)%			(2.81)%			30.82%

Ratios to average net assets^e

Expenses		1.07%	^f		1.07%	^f,g		1.07%	^f		1.05%	^f		1.03%			1.03%	^g

Net investment income		2.26%			1.69%			1.76%			1.71%			2.21%	^c		1.37%

Supplemental data

Net assets, end of period (000’s)		$782,451			$879,521			$876,128			$921,895			$1,171,896			$1,450,304

Portfolio turnover rate		15.61%			26.46%			22.88%			20.92%			17.46%			11.60%

^bBased on average daily shares outstanding.

^eRatios are annualized for periods less than one year.

^fBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^gBenefit of expense reduction rounds to less than 0.01%.


TG-8		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Growth VIP Fund (continued)


	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31,
	Six Months Ended June 30, 2018 (unaudited)			2017			2016			2015			2014			2013
Class 4
Per share operating performance (for a share outstanding throughout the period)

Net asset value, beginning of period		$16.13			$13.83			$13.44			$14.73			$15.35			$12.07


Income from investment operations^a:

Net investment income^b		0.17			0.24			0.22			0.23			0.33	^c		0.17

Net realized and unrealized gains (losses)		(0.55	)		2.28			0.94			(1.16	)		(0.76	)		3.47

Total from investment operations		(0.38	)		2.52			1.16			(0.93	)		(0.43	)		3.64


Less distributions from:

Net investment income		(0.29	)		(0.22	)		(0.25	)		(0.36	)		(0.19	)		(0.36	)

Net realized gains		(1.31	)		—			(0.52	)		—			—			—

Total distributions		(1.60	)		(0.22	)		(0.77	)		(0.36	)		(0.19	)		(0.36	)

Net asset value, end of period		$14.15			$16.13			$13.83			$13.44			$14.73			$15.35


Total return^d		(2.55)%			18.38%			9.47%			(6.54)%			(2.88)%			30.64%

Ratios to average net assets^e

Expenses		1.17%^f			1.17%	^f,g		1.17%	^f		1.15%	^f		1.13%			1.13%	^g

Net investment income		2.16%			1.59%			1.66%			1.61%			2.11%	^c		1.27%

Supplemental data

Net assets, end of period (000’s)		$34,436			$38,798			$43,286			$47,777			$59,989			$72,683

Portfolio turnover rate		15.61%			26.46%			22.88%			20.92%			17.46%			11.60%

^bBased on average daily shares outstanding.

^eRatios are annualized for periods less than one year.

^fBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^gBenefit of expense reduction rounds to less than 0.01%.


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			TG-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2018 (unaudited)


Templeton Growth VIP Fund
		Country		Shares		Value
	Common Stocks 98.0%
	Aerospace & Defense 1.1%
	BAE Systems PLC		United Kingdom		1,565,162	$	13,369,051

	Air Freight & Logistics 1.1%
	United Parcel Service Inc., B		United States		127,570		13,551,761

	Automobiles 0.8%
	Hero Motocorp Ltd.		India		199,170		10,105,419

	Banks 12.6%
	Bangkok Bank PCL, fgn		Thailand		1,704,150		10,250,720
	Bangkok Bank PCL, NVDR		Thailand		913,600		5,412,388
	Bank of Ireland Group PLC		Ireland		792,800		6,192,101
	Barclays PLC		United Kingdom		2,662,560		6,645,574
	BNP Paribas SA		France		243,927		15,158,730
	Citigroup Inc.		United States		384,990		25,763,531
	Credit Agricole SA		France		626,216		8,366,297
	HSBC Holdings PLC		United Kingdom		2,362,494		22,161,414
	ING Groep NV		Netherlands		579,536		8,347,300
	JPMorgan Chase & Co.		United States		124,540		12,977,068
	KB Financial Group Inc.		South Korea		328,964		15,572,260
	Standard Chartered PLC		United Kingdom		2,125,883		19,444,336

							156,291,719

	Beverages 0.8%
	Suntory Beverage & Food Ltd.		Japan		232,900		9,951,823

	Biotechnology 2.5%
	Amgen Inc.		United States		35,375		6,529,871
a	Celgene Corp.		United States		60,320		4,790,614
	Gilead Sciences Inc.		United States		283,260		20,066,139

							31,386,624

	Building Products 0.7%
	Compagnie de Saint-Gobain		France		187,590		8,387,666

	Capital Markets 1.9%
	Man Group PLC		United Kingdom		2,385,372		5,563,116
	UBS Group AG		Switzerland		1,096,280		16,963,339
	Value Partners Group Ltd.		Hong Kong		2,079,300		1,643,076

							24,169,531

	Chemicals 1.2%
	Akzo Nobel NV		Netherlands		169,645		14,532,371

	Communications Equipment 1.6%
a	CommScope Holding Co. Inc.		United States		270,890		7,911,343
	Ericsson, B		Sweden		1,247,952		9,655,070
a	NetScout Systems Inc.		United States		86,600		2,572,020

							20,138,433

	Construction Materials 0.5%
	Taiheiyo Cement Corp.		Japan		191,970		6,321,249

	Consumer Finance 1.7%
	Ally Financial Inc.		United States		160,390		4,213,445
	Capital One Financial Corp.		United States		187,470		17,228,493

							21,441,938

	Diversified Financial Services 0.6%
	Voya Financial Inc.		United States		157,941		7,423,227


TG-10		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)


		Country		Shares		Value
	Common Stocks (continued)
	Diversified Telecommunication Services 3.5%
b	China Telecom Corp. Ltd., ADR		China		269,865	$	12,529,832
	China Telecom Corp. Ltd., H		China		2,006,000		938,309
	Singapore Telecommunications Ltd.		Singapore		9,169,600		20,729,104
	Telefonica SA		Spain		1,008,135		8,573,603

							42,770,848

	Electrical Equipment 1.0%
	Vestas Wind Systems AS		Denmark		193,200		11,967,257

	Energy Equipment & Services 0.3%
	Helmerich & Payne Inc.		United States		63,820		4,069,163

	Food & Staples Retailing 1.6%
	The Kroger Co.		United States		44,600		1,268,870
	Seven & i Holdings Co. Ltd.		Japan		166,400		7,262,102
	Walgreens Boots Alliance Inc.		United States		193,029		11,584,635

							20,115,607

	Food Products 0.7%
	Kellogg Co.		United States		116,730		8,155,925

	Health Care Equipment & Supplies 1.6%
	Arjo AB, B		Sweden		1,057,200		3,773,142
	Getinge AB, B		Sweden		1,057,200		9,624,758
	Medtronic PLC		United States		74,440		6,372,808

							19,770,708

	Health Care Providers & Services 2.0%
	AmerisourceBergen Corp.		United States		168,500		14,367,995
	Cardinal Health Inc.		United States		207,060		10,110,740

							24,478,735

	Household Durables 1.4%
	Panasonic Corp.		Japan		1,255,690		16,941,804

	Industrial Conglomerates 2.6%
	CK Hutchison Holdings Ltd.		Hong Kong		1,114,010		11,813,031
	Siemens AG		Germany		150,912		19,962,728

							31,775,759

	Insurance 4.1%
	Aegon NV		Netherlands		2,921,736		17,532,302
	AXA SA		France		722,148		17,730,810
	China Life Insurance Co. Ltd., H		China		6,041,230		15,591,910

							50,855,022

	Internet Software & Services 2.9%
a	Alphabet Inc., A		United States		15,190		17,152,396
a	Baidu Inc., ADR		China		76,100		18,492,300

							35,644,696

	Leisure Products 1.0%
	Mattel Inc.		United States		722,640		11,865,749

	Life Sciences Tools & Services 0.6%
a	QIAGEN NV		Netherlands		205,690		7,497,919

	Machinery 1.4%
a	Navistar International Corp.		United States		438,140		17,841,061


		Semiannual Report		TG-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)


	Country		Shares		Value
Common Stocks (continued)
Media 4.4%
Comcast Corp., A		United States		455,054	$	14,930,322
SES SA, IDR		Luxembourg		1,571,620		28,810,013
Twenty-First Century Fox Inc., A		United States		218,492		10,856,867

						54,597,202

Metals & Mining 2.1%
Barrick Gold Corp.		Canada		865,310		11,361,520
Wheaton Precious Metals Corp.		Canada		689,844		15,233,049

						26,594,569

Multi-Utilities 2.4%
E.ON SE		Germany		590,630		6,316,833
innogy SE		Germany		212,620		9,114,331
Veolia Environnement SA		France		693,260		14,846,756

						30,277,920

Oil, Gas & Consumable Fuels 10.9%
Apache Corp.		United States		413,010		19,308,217
BP PLC		United Kingdom		3,841,161		29,335,060
ConocoPhillips		United States		81,210		5,653,840
Eni SpA		Italy		1,331,279		24,740,190
Exxon Mobil Corp.		United States		39,050		3,230,607
Husky Energy Inc.		Canada		719,150		11,212,436
Kunlun Energy Co. Ltd.		China		10,519,540		9,210,907
Royal Dutch Shell PLC, B		United Kingdom		913,539		32,736,194

						135,427,451

Personal Products 1.4%
Coty Inc., A		United States		1,211,910		17,087,931

Pharmaceuticals 11.7%
Allergan PLC		United States		144,924		24,161,729
Bayer AG		Germany		141,926		15,645,046
Eli Lilly & Co.		United States		192,470		16,423,465
Merck KGaA		Germany		163,224		15,946,565
Novartis AG		Switzerland		41,900		3,184,806
Perrigo Co. PLC		United States		192,570		14,040,279
Roche Holding AG		Switzerland		45,563		10,146,324
Sanofi		France		199,167		15,974,633
Teva Pharmaceutical Industries Ltd., ADR		Israel		1,230,810		29,933,299

						145,456,146

Real Estate Management & Development 1.0%
Mitsui Fudosan Co. Ltd.		Japan		513,520		12,404,828

Software 2.7%
Microsoft Corp.		United States		106,789		10,530,438
Oracle Corp.		United States		519,600		22,893,576

						33,424,014

Specialty Retail 3.0%
Advance Auto Parts Inc.		United States		154,170		20,920,869
Kingfisher PLC		United Kingdom		4,237,152		16,618,881

						37,539,750


TG-12		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)


		Country		Shares		Value
	Common Stocks (continued)
	Technology Hardware, Storage & Peripherals 2.9%
	Apple Inc.		United States		71,001	$	13,142,995
	Samsung Electronics Co. Ltd.		South Korea		532,970		22,290,703

							35,433,698

	Wireless Telecommunication Services 3.7%
	Bharti Airtel Ltd.		India		1,500,058		8,369,079
	China Mobile Ltd.		China		1,390,300		12,350,662
	SoftBank Group Corp.		Japan		154,450		11,124,530
	Vodafone Group PLC		United Kingdom		5,744,853		13,945,785

							45,790,056


	Total Common Stocks (Cost $1,069,627,450)						1,214,854,630


				Principal Amount
	Corporate Bonds (Cost $6,457,527) 0.6%
	Oil, Gas & Consumable Fuels 0.6%
c	Chesapeake Energy Corp., secured note, second lien, 144A, 8.00%, 12/15/22		United States	$	6,893,000		7,261,431


	Total Investments before Short Term Investments (Cost $1,076,084,977)						1,222,116,061

	Short Term Investments 1.0%
	U.S. Government and Agency Securities (Cost $599,949) 0.0%^†
d	FHLB, 7/02/18		United States		600,000		600,000

	Time Deposits (Cost $10,800,000) 0.9%
	Royal Bank of Canada, 1.85%, 7/02/18		United States		10,800,000		10,800,000


				Shares
e	Investments from Cash Collateral Received for Loaned Securities (Cost $849,950) 0.1%
	Money Market Funds 0.1%
f,g	Institutional Fiduciary Trust Money Market Portfolio, 1.51%		United States		849,950		849,950

	Total Investments (Cost $1,088,334,876) 99.6%						1,234,366,011
	Other Assets, less Liabilities 0.4%						5,548,615

	Net Assets 100.0%					$	1,239,914,626

See Abbreviations on page TG-23.

^†Rounds to less than 0.1% of net assets.

^aNon-income producing.

^bA portion or all of the security is on loan at June 30, 2018. See Note 1(c).

^cSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees.

^dThe security was issued on a discount basis with no stated coupon rate.

^eSee Note 1(c) regarding securities on loan.

^fSee Note 3(e) regarding investments in affiliated management investment companies.

^gThe rate shown is the annualized seven-day effective yield at period end.


The accompanying notes are an integral part of these financial statements. \|		Semiannual Report		TG-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2018 (unaudited)


	Templeton Growth VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	1,087,484,926
Cost - Non-controlled affiliates (Note 3e)		849,950

Value - Unaffiliated issuers ⁺	$	1,233,516,061
Value - Non-controlled affiliates (Note 3e)		849,950
Receivables:
Investment securities sold		4,355,861
Capital shares sold		163,425
Dividends and interest		4,002,573
European Union tax reclaims		820,169
Other assets		920

Total assets		1,243,708,959

Liabilities:
Payables:
Investment securities purchased		617,762
Capital shares redeemed		456,796
Management fees		811,465
Distribution fees		358,083
Funds advanced by custodian		413,500
Payable upon return of securities loaned		849,950
Accrued expenses and other liabilities		286,777

Total liabilities		3,794,333

Net assets, at value	$	1,239,914,626

Net assets consist of:
Paid-in capital	$	984,805,933
Undistributed net investment income		16,172,733
Net unrealized appreciation (depreciation)		146,013,189
Accumulated net realized gain (loss)		92,922,771

Net assets, at value	$	1,239,914,626


Class 1:
Net assets, at value	$	423,028,201

Shares outstanding		29,749,018

Net asset value and maximum offering price per share	$	14.22


Class 2:
Net assets, at value	$	782,450,814

Shares outstanding		55,970,263

Net asset value and maximum offering price per share	$	13.98


Class 4:
Net assets, at value	$	34,435,611

Shares outstanding		2,433,865

Net asset value and maximum offering price per share	$	14.15

⁺Includes securities loaned	$	826,454


TG-14		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2018 (unaudited)


	Templeton Growth VIP Fund
Investment income:
Dividends: (net of foreign taxes)*
Unaffiliated issuers	$	21,327,965
Interest:
Unaffiliated issuers		468,878
Income from securities loaned (net of fees and rebates)		77,845

Total investment income		21,874,688

Expenses:
Management fees (Note 3a)		5,151,038
Distribution fees: (Note 3c)
Class 2		1,042,948
Class 4		63,849
Custodian fees (Note 4)		53,178
Reports to shareholders		92,680
Professional fees		72,685
Trustees’ fees and expenses		3,457
Other		19,735

Total expenses		6,499,570
Expenses waived/paid by affiliates (Note 3e)		(13,064	)

Net expenses		6,486,506

Net investment income		15,388,182

Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		99,170,841
Foreign currency transactions		(206,642	)

Net realized gain (loss)		98,964,199

Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(145,334,986	)
Translation of other assets and liabilities denominated in foreign currencies		(157,977	)
Change in deferred taxes on unrealized appreciation		61,785

Net change in unrealized appreciation (depreciation)		(145,431,178	)

Net realized and unrealized gain (loss)		(46,466,979	)

Net increase (decrease) in net assets resulting from operations	$	(31,078,797	)

*Foreign taxes withheld on dividends	$	1,991,319


		The accompanying notes are an integral part of these financial statements. \| Semiannual Report			TG-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets


	Templeton Growth VIP Fund
	Six Months Ended June 30, 2018 (unaudited)			Year Ended December 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	15,388,182		$	24,695,547
Net realized gain (loss)		98,964,199			117,077,131
Net change in unrealized appreciation (depreciation)		(145,431,178	)		96,156,461

Net increase (decrease) in net assets resulting from operations		(31,078,797	)		237,929,139

Distributions to shareholders from:
Net investment income:
Class 1		(9,443,906	)		(8,645,537	)
Class 2		(15,736,729	)		(14,420,565	)
Class 4		(638,119	)		(607,359	)
Net realized gains:
Class 1		(35,064,775	)		—
Class 2		(66,647,585	)		—
Class 4		(2,903,936	)		—

Total distributions to shareholders		(130,435,050	)		(23,673,461	)

Capital share transactions: (Note 2)
Class 1		11,297,942			(59,747,929	)
Class 2		5,574,536			(132,483,391	)
Class 4		30,208			(10,910,240	)

Total capital share transactions		16,902,686			(203,141,560	)

Net increase (decrease) in net assets		(144,611,161	)		11,114,118
Net assets:
Beginning of period		1,384,525,787			1,373,411,669

End of period	$	1,239,914,626		$	1,384,525,787

Undistributed net investment income included in net assets:
End of period	$	16,172,733		$	26,603,305


TG-16		Semiannual Report \| The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Templeton Growth VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eighteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Templeton Growth VIP Fund (Fund) is included in this report. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers three classes of shares: Class 1, Class 2 and Class 4. Each class of shares may differ by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Investments in open-end mutual funds are valued at the closing NAV. Investments in time deposits are valued at cost, which approximates fair value.


		Semiannual Report		TG-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

a. Financial Instrument Valuation (continued)

b. Foreign Currency Translation

c. Securities Lending

The Fund participates in an agency based securities lending program to earn additional income. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of Fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Fund. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned, net of fees paid to the securities lending agent and/or third-party vendor, is reported separately in the Statement of Operations. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. If the borrower defaults on its obligation to return the securities loaned, the Fund has the


TG-18		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower.

d. Income and Deferred Taxes

The Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be

sustained upon examination by the tax authorities based on its technical merits. As of June 30, 2018, the Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.

e. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income is recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

f. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and


		Semiannual Report		TG-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

f. Accounting Estimates (continued)

liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

g. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust.

Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

2. Shares of Beneficial Interest

At June 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:


	Six Months Ended June 30, 2018						Year Ended December 31, 2017
	Shares			Amount			Shares			Amount

Class 1 Shares:
Shares sold		74,424		$	1,212,566			276,995		$	4,131,560
Shares issued in reinvestment of distributions		3,065,336			44,508,681			578,684			8,645,537
Shares redeemed		(2,093,901	)		(34,423,305	)		(4,745,568	)		(72,525,026	)

Net increase (decrease)		1,045,859		$	11,297,942			(3,889,889	)	$	(59,747,929	)


Class 2 Shares:
Shares sold		801,771		$	12,691,363			1,016,363		$	15,049,406
Shares issued in reinvestment of distributions		5,773,253			82,384,314			980,324			14,420,565
Shares redeemed		(5,668,385	)		(89,501,141	)		(10,869,278	)		(161,953,362	)

Net increase (decrease)		906,639		$	5,574,536			(8,872,591	)	$	(132,483,391	)


Class 4 Shares:
Shares sold		54,800		$	867,228			26,043		$	392,232
Shares issued in reinvestment of distributions		245,125			3,542,055			40,845			607,359
Shares redeemed		(271,135	)		(4,379,075	)		(791,302	)		(11,909,831	)

Net increase (decrease)		28,790		$	30,208			(724,414	)	$	(10,910,240	)

3. Transactions with Affiliates


Subsidiary		Affiliation
Templeton Global Advisors Limited (TGAL)		Investment manager
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent


TG-20		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

a. Management Fees

The Fund pays an investment management fee to TGAL based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
1.000%		Up to and including $100 million
0.900%		Over $100 million, up to and including $250 million
0.800%		Over $250 million, up to and including $500 million
0.750%		Over $500 million, up to and including $1 billion
0.700%		Over $1 billion, up to and including $5 billion
0.675%		Over $5 billion, up to and including $10 billion
0.655%		Over $10 billion, up to and including $15 billion
0.635%		Over $15 billion, up to and including $20 billion
0.615%		In excess of $20 billion

For the period ended June 30, 2018, the annualized gross effective investment management fee rate was 0.783% of the Fund’s average daily net assets.

b. Administrative Fees

Under an agreement with TGAL, FT Services provides administrative services to the Fund. The fee is paid by TGAL based on the Fund’s average daily net assets, and is not an additional expense of the Fund.

c. Distribution Fees

d. Transfer Agent Fees

Investor Services, under terms of an agreement, performs shareholder servicing for the Fund and is not paid by the Fund for the services.

e. Investments in Affiliated Management Investment Companies


	Number of Shares Held at Beginning of Period		Gross Additions		Gross Reductions			Number of Shares Held at End of Period		Value at End of Period		Dividend Income		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 1.51%		—		150,102,325		(149,252,375	)		849,950	$	849,950	$	—	$	—	$	—


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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

3. Transactions with Affiliates (continued)

f. Other Affiliated Transactions

At June 30, 2018, Franklin Templeton Variable Insurance Products Trust — Franklin Founding Funds Allocation VIP Fund owned 24.5% of the Fund’s outstanding shares.

4. Expense Offset Arrangement

5. Income Taxes

At June 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


Cost of investments	$	1,094,403,210

Unrealized appreciation	$	233,479,658
Unrealized depreciation		(93,516,857	)

Net unrealized appreciation (depreciation)	$	139,962,801

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of EU reclaims and foreign capital gains tax.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2018, aggregated $202,579,807 and $305,550,421, respectively.

At June 30, 2018, in connection with securities lending transactions, the Fund loaned equity investments and received $849,950 of cash collateral. The gross amount of recognized liability for such transactions is included in payable upon return of securities loaned in the Statement of Assets and Liabilities. The agreements can be terminated at any time.

7. Concentration of Risk

8. Credit Facility


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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

9. Fair Value Measurements

•

Level 1 – quoted prices in active markets for identical financial instruments

•

Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

•

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2018, in valuing the Fund’s assets carried at fair value, is as follows:


	Level 1		Level 2		Level 3		Total

Assets:
Investments in Securities:^a
Equity Investments	$	1,214,854,630	$	—	$	—	$	1,214,854,630
Corporate Bonds		—		7,261,431		—		7,261,431
Short Term Investments		849,950		11,400,000		—		12,249,950

Total Investments in Securities	$	1,215,704,580	$	18,661,431	$	—	$	1,234,366,011

^aFor detailed categories, see the accompanying Statement of Investments.

10. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations


Selected Portfolio

ADR		American Depositary Receipt

FHLB		Federal Home Loan Bank

IDR		International Depositary Receipt

NVDR		Non-Voting Depositary Receipt


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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Tax Information (unaudited)

At December 31, 2017, more than 50% of the Fund’s total assets were invested in securities of foreign issuers. In most instances, foreign taxes were withheld from income paid to the Fund on these investments. As shown in the table below, the Fund hereby reports to shareholders the foreign source income and foreign taxes paid, pursuant to Section 853 of the Internal Revenue Code. This written statement will allow shareholders of record on June 14, 2018, to treat their proportionate share of foreign taxes paid by the Funds as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.

The following table provides a detailed analysis of foreign tax paid, and foreign source income as reported by the Fund, to Class 1, Class 2, and Class 4 shareholders of record.


Class	Foreign Tax Paid Per Share	Foreign Source Income Per Share
Class1	$0.0322	$0.3124
Class2	$0.0322	$0.2841
Class4	$0.0322	$0.2702

Foreign Source Income Per Share (Column 2) is the amount per share of income dividends attributable to foreign securities held by the Fund, plus any foreign taxes withheld on these dividends.


TG-24		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Index Descriptions

The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges.

For Russell Indexes: Frank Russell Company is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell^® is a trademark of Frank Russell Company.

See www.franklintempletondatasources.com for additional data provider information.

Bloomberg Barclays US Aggregate Bond Index is a market capitalization-weighted index representing the US investment-grade, fixed-rate, taxable bond market with index components for government and corporate, mortgage pass-through and asset-backed securities. All issues included are SEC registered, taxable, dollar denominated and nonconvertible, must have at least one year to final maturity and must be rated investment grade (Baa3/BBB-/BBB- or higher) using the middle rating of Moody’s, Standard & Poor’s and Fitch, respectively.

Bloomberg Barclays US Government Index: Intermediate Component is the intermediate component of the Barclays US Government Index, which includes public obligations of the US Treasury with at least one year to final maturity and publicly issued debt of US government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the US government.

Consumer Price Index (CPI) is a commonly used measure of the inflation rate.

FTSE^® EPRA^®/NAREIT^® Developed Index is a free float-adjusted index designed to measure the performance of publicly traded real estate securities in the North American, European and Asian real estate markets.

FTSE World Government Bond Index is a market capitalization-weighted index consisting of investment-grade world government bond markets.

J.P. Morgan (JPM) Global Government Bond Index (GGBI) tracks total returns for liquid, fixed-rate, domestic government bonds with maturities greater than one year issued by developed countries globally.

Lipper Multi-Sector Income Funds Classification Average is calculated by averaging the total returns of all funds within the Lipper Multi-Sector Income Funds Classification in the Lipper Open-End underlying funds universe. Lipper Multi-Sector Income Funds are defined as funds that seek current income by allocation of assets among different fixed income securities sectors (not primarily in one sector except for defensive purposes), including US and foreign governments, with a significant portion rated below investment grade. For the six-month period ended 6/30/18, there were 331 funds in this category. Lipper calculations do not include contract fees, expenses or sales charges, and may have been different if such charges had been considered.

Lipper VIP Equity Income Funds Classification Average is an equally weighted average calculation of performance figures for all funds within the Lipper Equity Income Funds classification in the Lipper VIP underlying funds universe. Lipper Equity Income Funds seek relatively high current income and growth of income through investing 60% or more of their portfolios in equities. For the six-month period ended 6/30/18, there were 81 funds in this category. Lipper calculations do not include contract fees, expenses or sales charges, and may have been different if such charges had been considered.

Lipper VIP General US Government Funds Classification Average is an equally weighted average calculation of performance figures for all funds within the Lipper General US Government Funds classification in the Lipper VIP underlying funds universe. Lipper General US Government Funds invest primarily in US government and agency issues. For the six-month period ended 6/30/18, there were 57 funds in this category. Lipper calculations do not include contract fees, expenses or sales charges, and may have been different if such charges had been considered.

MSCI All Country World Index (ACWI) is a free float-adjusted, market capitalization-weighted index designed to measure equity market performance in global developed and emerging markets.

MSCI All Country World Index (ACWI) ex USA Index captures large- and mid-capitalization representation across 22 of 23 developed markets countries (excluding the US) and 23 emerging markets countries. The index covers approximately 85% of the global equity opportunity set outside the US.


		Semiannual Report			I-1

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Index Descriptions

MSCI Emerging Markets (EM) Index is a free float-adjusted, market capitalization-weighted index designed to measure equity market performance in global emerging markets.

MSCI World Index is a free float-adjusted, market capitalization-weighted index designed to measure equity market performance in global developed markets.

Russell 1000^® Growth Index is market capitalization weighted and measures performance of those Russell 1000^® Index companies with higher price-to-book ratios and higher forecasted growth values.

Russell 1000^® Index is market capitalization weighted and measures performance of the largest companies in the Russell 3000^® Index, which represents the majority of the U.S. market’s total capitalization.

Russell 2000^® Index is market capitalization weighted and measures performance of the 2,000 smallest companies in the Russell 3000^® Index, which represent a small amount of the total market capitalization of the Russell 3000^® Index.

Russell 2000^® Value Index is market capitalization weighted and measures performance of those Russell 2000^® Index companies with lower price-to-book ratios and lower forecasted growth values.

Russell 2500^TM Index is market capitalization weighted and measures performance of the smallest companies in the Russell 3000^® Index, which represent a modest amount of the Russell 3000^® Index’s total market capitalization.

Russell 3000^® Growth Index is market capitalization weighted and measures performance of those Russell 3000^® Index companies with higher price-to-book ratios and higher forecasted growth values.

Russell Midcap^® Growth Index is market capitalization weighted and measures performance of those Russell Midcap^® Index companies with higher price-to-book ratios and higher forecasted growth values.

Russell Midcap^® Index is market capitalization weighted and measures performance of the smallest companies in the Russell 1000^® Index, which represents a modest amount of the Russell 1000^® Index’s total market capitalization.

Standard & Poor’s^® 500 Index (S&P 500^®) is a market capitalization-weighted index of 500 stocks designed to measure total US equity market performance.

Standard & Poor’s^®/International Finance Corporation Investable (S&P/IFCI) Composite Index is a free float-adjusted, market capitalization-weighted index designed to measure equity performance in global emerging markets.


I-2		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Shareholder Information

Board Approval of Investment Management Agreements

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Franklin Flex Cap Growth VIP Fund

Franklin Global Real Estate VIP Fund

Franklin Growth and Income VIP Fund

Franklin Income VIP Fund

Franklin Large Cap Growth VIP Fund

Franklin Mutual Global Discovery VIP Fund

Franklin Mutual Shares VIP Fund

Franklin Rising Dividends VIP Fund

Franklin Small Cap Value VIP Fund

Franklin Small-Mid Cap Growth VIP Fund

Franklin Strategic Income VIP Fund

Franklin U.S. Government Securities VIP Fund

Franklin VolSmart Allocation VIP Fund

Templeton Developing Markets VIP Fund

Templeton Foreign VIP Fund

Templeton Global Bond VIP Fund

Templeton Growth VIP Fund

(each a Fund)

At an in-person meeting held on April 17, 2018 (Meeting), the Board of Trustees (Board) of Franklin Templeton Variable Insurance Products Trust (Trust), including a majority of the trustees who are not “interested persons” as defined in the Investment Company Act of 1940 (Independent Trustees), reviewed and approved the continuance of the (i) investment management agreement between Franklin Advisers, Inc. (FAI) and the Trust, on behalf of each of Franklin Flex Cap Growth VIP Fund, Franklin Growth and Income VIP Fund, Franklin Income VIP Fund, Franklin Large Cap Growth VIP Fund, Franklin Rising Dividends VIP Fund, Franklin Small Mid-Cap Growth VIP Fund, Franklin Strategic Income VIP Fund, Franklin U.S. Government Securities VIP Fund, Franklin VolSmart Allocation VIP Fund, and Templeton Global Bond VIP Fund; (ii) the investment sub-advisory agreements between FAI and each of Franklin Advisory Services, LLC and K2/D&S Management Co., LLC (each a Sub-Adviser), affiliates of FAI, on behalf of Franklin VolSmart Allocation VIP Fund; (iii) the investment management agreement between Franklin Templeton Institutional, LLC (FTIL) and the Trust, on behalf of Franklin Global Real Estate VIP Fund; (iv) the investment management agreement between Franklin Mutual Advisers, LLC (FMA) and the Trust, on behalf of each of Franklin Mutual Global Discovery VIP Fund and Franklin

Mutual Shares VIP Fund; (v) the investment management agreement between Franklin Advisory Services, LLC (FAS) and the Trust, on behalf of Franklin Small Cap Value VIP Fund; (vi) the investment management agreement between Templeton Asset Management Ltd. (TAML) and the Trust, on behalf of Templeton Developing Markets VIP Fund; (vii) the investment management agreement between Templeton Investment Counsel, LLC (TICL) and the Trust, on behalf of Templeton Foreign VIP Fund; and (viii) the investment management agreement between Templeton Global Advisors Limited (TGAL) and the Trust, on behalf of Templeton Growth VIP Fund (each a Management Agreement) for an additional one-year period. The Independent Trustees received advice from and met separately with Independent Trustee counsel in considering whether to approve the continuation of each Management Agreement. Although the Management Agreements for the Funds were considered at the same Board meeting, the Board considered the information provided to it about the Funds together and with respect to each Fund separately as the Board deemed appropriate. FAI, FTIL, FMA, FAS, TAML, TICL, TGAL and the Sub-Advisers are each referred to herein as a Manager.

In considering the continuation of each Management Agreement, the Board reviewed and considered information provided by each Manager at the Meeting and throughout the year at meetings of the Board and its committees. The Board also reviewed and considered information provided in response to a detailed set of requests for information submitted to each Manager by Independent Trustee counsel on behalf of the Independent Trustees in connection with the annual contract renewal process. In addition, prior to the Meeting, the Independent Trustees held a telephonic contract renewal meeting at which the Independent Trustees conferred amongst themselves and Independent Trustee counsel about contract renewal matters. The Board reviewed and considered all of the factors it deemed relevant in approving the continuance of each Management Agreement, including, but not limited to: (i) the nature, extent and quality of the services provided by each Manager; (ii) the investment performance of each Fund; (iii) the costs of the services provided and profits realized by each Manager and its affiliates from the relationship with each Fund; (iv) the extent to which economies of scale are realized as each Fund grows; and (v) whether fee levels reflect these economies of scale for the benefit of Fund investors.

In approving the continuance of each Management Agreement, the Board, including a majority of the Independent Trustees, determined that the terms of the Management Agreement are


		Semiannual Report		SI-1

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

SHAREHOLDER INFORMATION

fair and reasonable and that the continuance of such Management Agreement is in the interests of the applicable Fund and its shareholders. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s determination.

Nature, Extent and Quality of Services

The Board reviewed and considered information regarding the nature, extent and quality of investment management services provided by each Manager and its affiliates to the Funds and their shareholders. This information included, among other things, the qualifications, background and experience of the senior management and investment personnel of each Manager; the structure of investment personnel compensation; oversight of third-party service providers; investment performance reports and related financial information for each Fund; reports on expenses, shareholder services, marketing support payments made to financial intermediaries and third party servicing arrangements; legal and compliance matters; risk controls; pricing and other services provided by each Manager and its affiliates; and management fees charged by each Manager and its affiliates to U.S. funds and other accounts, including management’s explanation of differences among accounts where relevant. The Board also reviewed and considered an annual report on payments made by Franklin Templeton Investments (FTI) or the Funds to financial intermediaries, as well as a memorandum relating to third-party servicing arrangements in response to a guidance update in 2016 from the U.S. Securities and Exchange Commission (SEC) relating to mutual fund distribution and sub-accounting fees. The Board noted management’s continuing efforts and expenditures in establishing effective business continuity plans and developing strategies to address areas of heightened concern in the mutual fund industry, such as cybersecurity and liquidity risk management. The Board also recognized management’s commitment to facilitating Board oversight of particular areas, including derivatives and payments to intermediaries, by enhanced reporting.

The Board also reviewed and considered the benefits provided to Fund shareholders of investing in a fund that is part of the Franklin Templeton family of funds. The Board noted the financial position of Franklin Resources, Inc. (FRI), the Managers’ parent, and its commitment to the mutual fund business as evidenced by its continued introduction of new funds, reassessment of the fund offerings in response to the market environment and project initiatives and capital investments relating to the services provided to the Funds by the FTI organization.

Following consideration of such information, the Board was satisfied with the nature, extent and quality of services provided by each Manager and its affiliates to the Funds and their shareholders.

Fund Performance

The Board reviewed and considered the performance results of each Fund over various time periods ended January 31, 2018. The Board considered the performance returns for each Fund in comparison to the performance returns of mutual funds deemed comparable to the Fund included in a universe (Performance Universe) selected by Broadridge Financial Solutions, Inc. (Broadridge), an independent provider of investment company data. The Board received a description of the methodology used by Broadridge to select the mutual funds included in a Performance Universe. The Board also reviewed and considered Fund performance reports provided and discussions that occurred with portfolio managers at Board meetings throughout the year. A summary of each Fund’s performance results is below.

Franklin Flex Cap Growth VIP Fund – The Performance Universe for this Fund included the Fund and all multi-cap growth funds underlying variable insurance products (VIPs). The Board noted that the Fund’s annualized total return for the one-year period was above the median of its Performance Universe, but for the three-, five- and 10-year periods was below the median of its Performance Universe. The Board concluded that the Fund’s performance was satisfactory, noting the Fund’s second quintile, one-year period performance of 33.96%. The Board also noted the actions management has taken in an effort to address the Fund’s performance, including changes to the Fund’s portfolio management team and enhancements to the team’s security selection process.

Franklin Global Real Estate VIP Fund – The Performance Universe for this Fund included the Fund and all global real estate funds underlying VIPs. The Board noted that the Fund’s annualized total return for the one- and 10-year periods was below the median of its Performance Universe, but for the three- and five-year periods was above the median of its Performance Universe. The Board concluded that the Fund’s performance was acceptable. In doing so, the Board noted that the Fund’s annualized total return for the one-year period, while below the median, exceeded 10.3%.

Franklin Growth and Income VIP Fund – The Performance Universe for this Fund included the Fund and all equity income funds underlying VIPs. The Board noted that the Fund’s annualized income return and annualized total return for the


SI-2		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

SHAREHOLDER INFORMATION

one-, three-, five- and 10-year periods were above the medians of its Performance Universe. The Board concluded that the Fund’s performance was satisfactory.

Franklin Income VIP Fund and Franklin Strategic Income VIP Fund – The Performance Universe for the Franklin Income VIP Fund included the Fund and all mixed-asset target allocation moderate funds underlying VIPs. The Performance Universe for the Franklin Strategic Income VIP Fund included the Fund and all general bond funds underlying VIPs. The Board noted that the Funds’ annualized income returns for the one-, three-, five- and 10-year periods were above the medians of their respective Performance Universes. The Board also noted that the Funds’ annualized total returns for the one-, three- and five-year periods were below the medians of their respective Performance Universes, but for the 10-year period were above the medians of their respective Performance Universes. Given the Funds’ income-oriented investment objectives, the Board concluded that the Funds’ performance was satisfactory.

Franklin Large Cap Growth VIP Fund – The Performance Universe for this Fund included the Fund and all multi-cap growth funds underlying VIPs. The Board noted that the Fund’s annualized total return for the one- and three-year periods was above the median of its Performance Universe, but for the five- and 10-year periods was below the median of its Performance Universe. The Board concluded that the Fund’s performance was satisfactory. In doing so, the Board noted that the Fund’s annualized total return for the one-year period exceeded 32% and the annualized total return for the five- and 10-year periods, while below the median, exceeded 14.9% and 8.9%, respectively.

Franklin Mutual Global Discovery VIP Fund – The Performance Universe for this Fund included the Fund and all global multi-cap value funds underlying VIPs. The Board noted that the Fund’s annualized total return for the one- and three-year periods was below the median of its Performance Universe, but for the five- and 10-year periods was above the median and in the first quintile (the best) of its Performance Universe. The Board concluded that the Fund’s performance was acceptable. In doing so, the Board noted that the Fund’s annualized total return for the one- and three-year periods, while below the median, exceeded 11.0% and 7.7%, respectively.

Franklin Mutual Shares VIP Fund and Franklin Small-Mid Cap Growth VIP Fund – The Performance Universe for the Franklin Mutual Shares VIP Fund included the Fund and all large-cap value funds underlying VIPs. The Performance

Universe for the Franklin Small-Mid Cap Growth VIP Fund included the Fund and all mid-cap growth funds underlying VIPs. The Board noted that the Funds’ annualized total returns for the one-, three-, five- and 10-year periods were below the medians of their respective Performance Universes. The Board discussed the Funds’ performance with management. The Board noted management’s explanation that the Franklin Mutual Shares VIP Fund’s overweight exposure to U.S. based insurance companies, pharmaceutical stocks, and media stocks detracted from Fund performance. Management further explained that it remains consistent in its disciplined bottom-up investment approach focused on identifying and investing in companies that are trading at a significant discount to their intrinsic value. The Board also noted management’s explanation that the Franklin Small-Mid Cap Growth VIP Fund’s positioning in the healthcare, consumer discretionary, and industrial sectors was a primary detractor from relative performance over the one-, three-, and five-year periods. The Board further noted management’s explanation that it has reduced the Fund’s exposure to stock selection risk in those industries and had made changes to the portfolio management team in 2017. The Board also noted management’s report that, since January 31, 2018, the Fund has recovered approximately 150 basis points in relative performance for the one-year period and is approximately even with the index and peer average, year-to-date. The Board further noted that the annualized total returns for the one-year period, while below the median, exceeded 11.1% for the Franklin Mutual Shares VIP Fund and 22.4% for the Franklin Small-Mid Cap Growth VIP Fund.

Franklin Rising Dividends VIP Fund and Templeton Developing Markets VIP Fund – The Performance Universe for the Franklin Rising Dividends VIP Fund included the Fund and all multi-cap core funds underlying VIPs. The Performance Universe for the Templeton Developing Markets VIP Fund included the Fund and all emerging markets funds underlying VIPs. The Board noted that the Funds’ annualized total returns for the one-, three- and 10-year periods were above the medians of their respective Performance Universes, but for the five-year period were below the medians of their respective Performance Universes. The Board concluded that the Funds’ performance was satisfactory. In doing so, the Board noted that the annualized total returns for the one-year period exceeded 24.8% for the Franklin Rising Dividends VIP Fund and 41.4% for the Templeton Developing Markets VIP Fund.

Franklin Small Cap Value VIP Fund – The Performance Universe for this Fund included the Fund and all small-cap value funds underlying VIPs. The Board noted that the Fund’s


		Semiannual Report		SI-3

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

SHAREHOLDER INFORMATION

annualized total return for the one-, three-, five- and 10-year periods was above the median of its Performance Universe. The Board concluded that the Fund’s performance was satisfactory.

Franklin U.S. Government Securities VIP Fund – The Performance Universe for this Fund included the Fund and all general U.S. government funds underlying VIPs. The Board noted that the Fund’s annualized income return for the one-, three-, five- and 10-year periods was above the median and in the first quintile (the best) of its Performance Universe. The Board also noted that the Fund’s annualized total return for the one-, five- and 10-year periods was slightly below the median of its Performance Universe, but for the three-year period was above the median and in the first quintile (the best) of its Performance Universe. The Board concluded that the Fund’s performance was satisfactory given the Fund’s income-oriented investment objective and the nature of the Fund’s investments, which are primarily in U.S. mortgage-backed securities.

Franklin VolSmart Allocation VIP Fund – The Performance Universe for this Fund included the Fund and all flexible portfolio funds underlying VIPs. The Fund has been in operation for less than five years. The Board noted that the Fund’s annualized total return for the one- and three-year periods was above the median of its Performance Universe. The Board concluded that the Fund’s performance was satisfactory.

Templeton Foreign VIP Fund – The Performance Universe for this Fund included the Fund and all international multi-cap value funds underlying VIPs. The Board noted that the Fund’s annualized total return for one-, three- and five-year periods was below the median of its Performance Universe, but for the 10-year period was above the median and in the first quintile (the best) of its Performance Universe. The Board discussed the Fund’s performance with management and noted management’s explanation that Fund positions in the health care, energy, materials and technology sectors detracted from Fund performance over the one-, three- and five-year periods. Management further explained that it was reviewing the relevant thesis underlying its research conclusions to ensure management’s continued conviction that the Fund’s portfolio holdings are undervalued. The Board concluded that the Fund’s performance was acceptable. In doing so, the Board noted management’s explanation and that the Fund’s annualized total return for the one-year period, while below the median, exceeded 17.2%.

Templeton Global Bond VIP Fund – The Performance Universe for this Fund included the Fund and all global income funds underlying VIPs. The Board noted that the Fund’s annualized

income return for the one-year period was below the median of its Performance Universe, but for the three-, five- and 10-year periods was above the median and in the first (the best) or second quintile of its Performance Universe. The Board also noted that the Fund’s annualized total return for the one- and three-year periods was below the median of its Performance Universe, but for the five- and 10-year periods was above the median of its Performance Universe. Given the Fund’s income-oriented investment objective, the Board concluded that the Fund’s performance was satisfactory.

Templeton Growth VIP Fund – The Performance Universe for this Fund included the Fund and all global multi-cap value funds underlying VIPs. The Board noted that the Fund’s annualized total return for the one-, three- and five-year periods was above the median and in the first (the best) or second quintile of its Performance Universe, but for the 10-year period was below the median of its Performance Universe. The Board concluded that the Fund’s performance was satisfactory. In doing so, the Board noted that the Fund’s annualized total return for the one-year period exceeded 22.1%.

Comparative Fees and Expenses

The Board reviewed and considered information regarding each Fund’s actual total expense ratio and its various components, including, as applicable, management fees; transfer agent expenses; underlying fund expenses; Rule 12b-1 and non-Rule 12b-1 service fees; and other non-management fees. The Board also noted the quarterly and annual reports it receives on all marketing support payments made by FTI to financial intermediaries. The Board considered the actual total expense ratio and, separately, the contractual management fee rate, without the effect of fee waivers (Management Rate), if any, of each Fund in comparison to the median expense ratio and median Management Rate, respectively, of other mutual funds deemed comparable to and with a similar expense structure as the Fund selected by Broadridge (Expense Group). Broadridge fee and expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios and Management Rates generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Broadridge to be an appropriate measure of comparative fees and expenses. The Broadridge Management Rate includes administrative charges. The Board received a description of the


SI-4		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

SHAREHOLDER INFORMATION

methodology used by Broadridge to select the mutual funds included in an Expense Group.

Franklin Flex Cap Growth VIP Fund, Franklin Strategic Income VIP Fund, and Templeton Growth VIP Fund – The Expense Group for the Franklin Flex Cap Growth VIP Fund included the Fund and eight other multi-cap growth funds underlying VIPs. The Expense Group for the Franklin Strategic Income VIP Fund included the Fund and eight other general bond funds underlying VIPs. The Expense Group for the Templeton Growth VIP Fund included the Fund, one other global multi-cap value fund underlying VIPs, three global multi-cap core funds underlying VIPs and two global multi-cap growth funds underlying VIPs. The Board noted that the Management Rates for these Funds were slightly above the medians of their respective Expense Groups, but their actual total expense ratios were below the medians of their respective Expense Groups. The Board concluded that the Management Rates charged to these Funds are reasonable. In doing so, the Board noted that the Franklin Flex Cap Growth Fund’s actual total expense ratio reflected a fee waiver from management.

Franklin Small-Mid Cap Growth VIP Fund – The Expense Group for the Fund included the Fund and eight other mid-cap growth funds underlying VIPs. The Board noted that the Management Rate and actual total expense ratio for the Fund were equal to the medians of its Expense Group. The Board concluded that the Management Rate charged to the Fund is reasonable.

Franklin Global Real Estate VIP Fund, Franklin Mutual Global Discovery VIP Fund, Franklin Mutual Shares VIP Fund, Templeton Developing Markets VIP Fund – The Expense Group for the Franklin Global Real Estate VIP Fund included the Fund and seven other global real estate funds underlying VIPs. The Expense Group for the Franklin Mutual Global Discovery VIP Fund included the Fund, one other global multi-cap value fund underlying VIPs, three global multi-cap core funds underlying VIPs and five global multi-cap growth funds underlying VIPs. The Expense Group for the Franklin Mutual Shares VIP Fund included the Fund and 10 other large-cap value funds underlying VIPs. The Expense Group for the Templeton Developing Markets VIP Fund included the Fund and eight other emerging markets funds underlying VIPs. The Board noted that the Management Rates and actual total expense ratios for these Funds were above the medians of their respective Expense Groups. The Board concluded that the Management Rates charged to these Funds are reasonable. With respect to the Franklin Mutual Shares VIP Fund and the

Franklin Mutual Global Discovery VIP Fund, the Board noted management’s explanation that the portfolio management team makes investments in distressed securities and merger arbitrage that are specialist in nature and therefore merit a higher Management Rate. With respect to the Franklin Global Real Estate VIP Fund, the Board noted management’s explanation that the portfolio managers’ rigorous fundamental analysis with the inclusion of more active risk controls merits a higher Management Rate. Finally, with respect to the Templeton Developing Markets VIP Fund, the Board noted management’s agreement to reduce the Management Rate applicable to the Fund.

Franklin Growth and Income VIP Fund, Franklin Income VIP Fund, Franklin Rising Dividends VIP Fund, Franklin Small Cap Value VIP Fund, Franklin U.S. Government Securities VIP Fund, Templeton Foreign VIP Fund and Templeton Global Bond VIP Fund – The Expense Group for the Franklin Growth and Income VIP Fund included the Fund and seven other equity income funds underlying VIPs. The Expense Group for the Franklin Income VIP Fund included the Fund and seven other mixed-asset target allocation moderate funds underlying VIPs. The Expense Group for the Franklin Rising Dividends VIP Fund included the Fund and nine other multi-cap core funds underlying VIPs. The Expense Group for the Franklin Small Cap Value VIP Fund included the Fund and eight other small-cap value funds underlying VIPs. The Expense Group for the Franklin U.S. Government Securities VIP Fund included the Fund and nine other general U.S. government funds underlying VIPs. The Expense Group for the Templeton Foreign VIP Fund included the Fund, five other international multi-cap value funds underlying VIPs and four international multi-cap core funds underlying VIPs. The Expense Group for the Templeton Global Bond VIP Fund included the Fund and seven other global income funds underlying VIPs. The Board noted that the Management Rates and actual total expense ratios for these Funds were below the medians of their respective Expense Groups. The Board concluded that the Management Rates charged to these Funds are reasonable. The Board also noted that the Franklin Growth and Income VIP Fund’s actual total expense ratio reflected a fee waiver from management.

Franklin Large Cap Growth VIP Fund – The Expense Group for the Fund included the Fund and seven other multi-cap growth funds underlying VIPs. The Board noted that the Management Rate for the Fund was equal to the median of its Expense Group, but its actual total expense ratio was below the


		Semiannual Report		SI-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

SHAREHOLDER INFORMATION

median of its Expense Group. The Board concluded that the Management Rate charged to the Fund is reasonable.

Franklin VolSmart Allocation VIP Fund – The Expense Group for the Fund included the Fund and four other flexible portfolio funds underlying VIPs. The Board noted the small size of the Expense Group. The Board also noted that the Management Rate for the Fund was below the median of its Expense Group and its actual total expense ratio was slightly above the median of its Expense Group. The Board concluded that the Management Rate charged to the Fund is reasonable. In doing so, the Board noted that the Fund’s actual total expense ratio reflected a fee waiver from management and that the Sub-Advisers were paid by FAI out of the management fee FAI received from the Fund.

Profitability

The Board reviewed and considered information regarding the profits realized by each Manager and its affiliates in connection with the operation of each Fund. In this respect, the Board considered the Fund profitability analysis provided by each Manager that addresses the overall profitability of FTI’s U.S. fund business, as well as its profits in providing investment management and other services to each of the individual funds during the 12-month period ended September 30, 2017, being the most recent fiscal year-end for FRI. The Board noted that although management continually makes refinements to its methodologies used in calculating profitability in response to organizational and product related changes, the overall methodology has remained consistent with that used in the Funds’ profitability report presentations from prior years. Additionally, PricewaterhouseCoopers LLP, auditor to Franklin Resources, Inc. and certain Franklin Templeton funds, has been engaged by each Manager to periodically review and assess the allocation methodologies to be used solely by the Funds’ Board with respect to the profitability analysis.

The Board noted management’s belief that costs incurred in establishing the infrastructure necessary for the type of mutual fund operations conducted by each Manager and its affiliates may not be fully reflected in the expenses allocated to each Fund in determining its profitability, as well as the fact that the level of profits, to a certain extent, reflected operational cost savings and efficiencies initiated by management. The Board also noted management’s expenditures in improving shareholder services provided to the Funds, as well as the need to implement systems and meet additional regulatory and compliance requirements resulting from recent SEC and other regulatory requirements.

The Board also considered the extent to which each Manager and its affiliates might derive ancillary benefits from fund operations, including revenues generated from transfer agent services, potential benefits resulting from personnel and systems enhancements necessitated by fund growth, as well as increased leverage with service providers and counterparties. Based upon its consideration of all these factors, the Board concluded that the level of profits realized by each Manager and its affiliates from providing services to each Fund was not excessive in view of the nature, extent and quality of services provided to each Fund.

Economies of Scale

The Board reviewed and considered the extent to which each Manager may realize economies of scale, if any, as each Fund grows larger and whether the Fund’s management fee structure reflects any economies of scale for the benefit of shareholders. With respect to possible economies of scale, the Board noted the existence of management fee breakpoints for each Fund (except for the Franklin VolSmart Allocation VIP Fund), which operate generally to share any economies of scale with a Fund’s shareholders by reducing the Fund’s effective management fees as the Fund grows in size. The Board considered each Manager’s view that any analyses of potential economies of scale in managing a particular fund are inherently limited in light of the joint and common costs and investments each Manager incurs across the Franklin Templeton family of funds as a whole. The Board concluded that to the extent economies of scale may be realized by each Manager and its affiliates, each Fund’s management fee structure (except that of the Franklin VolSmart Allocation VIP Fund) provided a sharing of benefits with the Fund and its shareholders as the Fund grows. The Board recognized that there would not likely be any economies of scale for the Franklin Flex Cap Growth VIP Fund, Franklin Global Real Estate VIP Fund, Franklin Growth and Income VIP Fund, Franklin Large Cap Growth VIP Fund and Franklin VolSmart Allocation VIP Fund until each Fund’s assets grow. The Board also recognized that given the decline in assets over the past three calendar years for each of the Franklin Small-Mid Cap Growth VIP Fund, Franklin Strategic Income VIP Fund, Templeton Foreign VIP Fund and Templeton Growth VIP Fund, these Funds are not expected to experience additional economies of scale in the foreseeable future.

Conclusion

Based on its review, consideration and evaluation of all factors it believed relevant, including the above-described factors and


SI-6		Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

SHAREHOLDER INFORMATION

conclusions, the Board unanimously approved the continuation of each Management Agreement for an additional one-year period.

Proxy Voting Policies and Procedures

The Trust’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the US Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.

Quarterly Statement of Investments

The Trust files a complete statement of investments with the US Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.


		Semiannual Report		SI-7

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LOGO

Semiannual Report

Franklin Templeton

Variable Insurance Products Trust

Investment Managers

Franklin Advisers, Inc.

Franklin Advisory Services, LLC

Franklin Mutual Advisers, LLC

Franklin Templeton Institutional, LLC

Templeton Asset Management Ltd.

Templeton Global Advisors Limited

Templeton Investment Counsel, LLC

Fund Administrator

Franklin Templeton Services, LLC

Distributor

Franklin Templeton Distributors, Inc.

Franklin Templeton Variable Insurance Products Trust (FTVIP) shares are not offered to the public; they are offered and sold only to: (1) insurance company separate accounts (Separate Account) to serve as the underlying investment vehicle for variable contracts; (2) certain qualified plans; and (3) other mutual funds (funds of funds).

Authorized for distribution to investors in Separate Accounts only when accompanied or preceded by the current prospectus for the applicable contract, which includes the Separate Account and the FTVIP prospectuses. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. The prospectus contains this and other information; please read it carefully before investing.

To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.


© 2018 Franklin Templeton Investments. All rights reserved.		VIP1 S 08/18

Item 2.

Code of Ethics.

(a)	The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer.

(c)

N/A

(d)

N/A

(f)	Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.

Item 3.

Audit Committee Financial Expert.

(a) (1) The Registrant has an audit committee financial expert serving on its audit committee.

(2)

The audit committee financial expert is John B. Wilson and he is “independent” as defined under the relevant Securities and Exchange Commission Rules and Releases.


Item 4.	Principal Accountant Fees and Services.	N/A

Item 5.	Audit Committee of Listed Registrants.	N/A

Item 6.	Schedule of Investments.	N/A

Item 7.	Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.	N/A

Item 8.	Portfolio Managers of Closed-End Management Investment Companies.	N/A

Item 9.	Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.	N/A

Item 10.	Submission of Matters to a Vote of Security Holders.

There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees that would require disclosure herein.

Item 11.

Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures. The Registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Registrant’s

filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.

(b) Changes in Internal Controls. There have been no changes in the Registrant’s internal controls or in other factors that could materially affect the internal controls over financial reporting subsequent to the date of their evaluation in connection with the preparation of this Shareholder Report on Form N-CSR.


Item 12.		Disclosure of Securities Lending Activities for Closed-End Management Investment Company.		N/A

Item 13.

Exhibits.

(a) (1) Code of Ethics

(a) (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Franklin Templeton Variable Insurance Products Trust


By		/s/ MATTHEW T. HINKLE
		Matthew T. Hinkle
		Chief Executive Officer –
		Finance and Administration
Date August 24, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By		/s/ MATTHEW T. HINKLE
		Matthew T. Hinkle
		Chief Executive Officer –
		Finance and Administration
Date August 24, 2018

By		/s/ GASTON GARDEY
		Gaston Gardey
		Chief Financial Officer and
		Chief Accounting Officer
Date August 24, 2018